McDonald’s Corporation’s (MCD) comparable sales for the month of October 2009 showed a sluggish growth of 3.3% as against the rise of 8.2% in the same month last year, exposing its sensitivity to rising unemployment, economic downturn, and the discount war amongst fast-food chains to lure consumers. The company faces stiff competition from Burger King Holdings [...]

(MCD) McDonald’s Corporation Outdoing Rivals

McDonald’s Corporation’s (MCD) comparable sales for the month of October 2009 showed a sluggish growth of 3.3% as against the rise of 8.2% in the same month last year, exposing its sensitivity to rising unemployment, economic downturn, and the discount war amongst fast-food chains to lure consumers.
 
The company faces stiff competition from Burger King Holdings Inc. (BKC), Wendy’s/Arby’s Group, Inc. (WEN) and Yum! Brands Inc. (YUM). However, these quick-service operators are faring better than casual dining restaurant chains, such as Cosi Inc. (COSI) and Red Robin Gourmet Burgers Inc. (RRGB), as cash-strapped consumers are trading towards fast-food centers due to relative cheap dining options. 

System-wide sales at McDonald’s worldwide restaurants climbed 10.3% for the month of October. However, in constant currencies, the rate of increase in system-wide sales dipped to 5.2%.
 In the United States , comparable sales remained flat falling 0.1% in October (versus 5.3% increase last year for the comparable month). New menu products, including Angus Third Pounders and McCafe premium coffee line-up continued to support the month's results. 

The fast-food giant had earlier indicated that U.S. sales for the month of October would be weak. Still the month’s result fared better than the overall quick-service restaurant industry. 

In Europe, comparable sales increased 6.4% in October (versus 9.8% increase last year for the comparable month) fueled by strong performance in the U.K. , Germany and France . A variety of mid-tier items and premium menu options contributed to sales. 
Comparable sales in Asia/Pacific, Middle East and Africa (APMEA) rose 4.7% in October (versus 11.5% increase last year for the comparable month) driven by Australia and Japan, partly offset by China.
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California Pizza Kitchen Inc. (CPKI) recently reported third-quarter 2009 results with a mid-single digit fall in the top-line but a surprise double-digit rise in the bottom-line. Effective cost management and a lower tax rate have driven earnings growth. The quarterly earnings of 24 cents a share surpassed the Zacks Consensus Estimate by a penny, jumping 20% [...]

(CPKI) California Pizza Kitchen’s Profit Climbs

Wendy’s/Arby’s Group, Inc. (WEN), the third largest fast-food restaurant operator, recently reported third-quarter 2009 results. The quarterly earnings of 6 cents a share were in line with the Zacks Consensus Estimate. The company had reported a loss of 14 cents in the prior-year quarter, excluding income from discontinued operations. Lower commodity prices and cost-cutting initiatives [...]

(WEN) Wendy’s-Arby’s Group Reports Earnings Meeting Consensus

California Pizza Kitchen Inc. (CPKI) recently reported third-quarter 2009 results with a mid-single digit fall in the top-line but a surprise double-digit rise in the bottom-line. Effective cost management and a lower tax rate have driven earnings growth. 

The quarterly earnings of 24 cents a share surpassed the Zacks Consensus Estimate by a penny, jumping 20% from 20 cents posted in the prior-year quarter. The casual dining operator now expects fourth-quarter 2009 earnings in the range of 16 cents to 18 cents a share. 

California Pizza Kitchen continues to experience fall in the top-line. After declining 2.2% and 3.2% year-on-year in the first and second quarters, respectively, total revenue dipped 5.3% to $164.8 million in the quarter under review. 

Restaurant sales slipped 5.7% to $161.2 million, royalties from the Kraft licensing agreement soared 35.2% to $2.5 million, domestic franchise revenue fell marginally by 1% to $714,000, and international franchise revenue plunged 18% to $468,000. 

Casual dining restaurant operators are facing the brunt of the global meltdown with sagging comparable-store sales and declining traffic, as cash-strapped consumers are dining out less and looking for cheaper alternatives such as fast food centers. Other operators in the casual dining segment are Darden Restaurants Inc. (DRI), Brinker International Inc. (EAT), Cosi Inc. (COSI) and Red Robin Gourmet Burgers Inc. (RRGB). 

California Pizza Kitchen’s comparable restaurant sales for the quarter dipped 8%, after declining 6.5% and 5.9% in the second and first quarters of 2009. The restaurant chain expects fourth-quarter 2009 comps to fall within the range of 5.5% to 6.5%. 

Restaurant operating cash flow margin shrank 40 basis points (bps) to 17%, hurt by a 120 bps rise in labor costs to 37.8% and a 100 bps increase in operating and occupancy costs to 22.2%, partially offset by a 180 bps fall in food and beverage costs to 23%. 

During the quarter, California Pizza Kitchen opened one company-owned full service domestic restaurant and one franchised domestic restaurant, closing one company-owned full service domestic restaurant and one franchised domestic restaurant. Management expects to open one international full service franchise restaurant in fourth-quarter 2009. 

In fiscal year 2010, the company plans to open eight full service restaurants, while franchisees plan to open eight international and two domestic locations. Currently, the company operates 256 locations, of which 208 are company-owned and 48 are operated under franchise or license agreements. 

California Pizza Kitchen ended the quarter with cash and cash equivalents of $14.3 million, total debt of $37 million and shareholders’ equity of $197.5 million.
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