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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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

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 have driven earnings.
 
Consolidated revenue surged 191% year-on-year to $903.2 million due to Wendy’s merger, which added 6,608 restaurants as of Sep 27, 2009, and contributed $613.5 million in total revenue during the quarter. The merger between Triarc Companies, the franchisor of the Arby’s restaurant chain and Wendy's International was completed in Sep 2008. 

The quick-service food chain is trying to lure consumers by offering $5.01 combo meals, and plans to make $1 menu available at most of its restaurants to compete with big players like McDonald’s Corporation (MCD) and Burger King Holdings Inc. (BKC). 

Fast food chains are faring better than casual dining operators like Red Robin Gourmet Burgers Inc. (RRGB) and Cosi Inc. (COSI) as cash-strapped consumers are trading down to cheaper alternatives or dining at home. 

Wendy’s Financial Highlights: 
Wendy’s total revenue for the quarter fell 1.8% to $613.5 million due to lower comparable-store sales. Company-operated restaurants sales declined 2.1% to $536.8 million, whereas franchise revenue climbed marginally by 0.1% to $76.7 million.
 
The company-operated comparable-store sales increased 0.1%, whereas franchise comparable-store sales ascended 0.4%. However, comps remained weak in Oct 2009. Company-operated restaurant margin for the quarter expanded 400 basis points to 16.5% reflecting reduction in food, labor and certain controllable costs.
 
Management expects to improve full year restaurant margins by more than 250 basis points, which is half of the company’s three-year target of 500 basis points increment in restaurant margin. 

Arby’s Financial Highlights: 
Arby’s total revenue for the quarter fell 6.7% to $289.7 million due to lower comparable-store sales. Company-operated restaurants sales declined 6.4% to $269.2 million, whereas franchise revenue slipped 9.9% to $20.5 million. 

The company-operated comparable-store sales dipped 6.5%, whereas franchise comparable-store sales plunged 10.2%. Comps further softened in October. Company-operated restaurant margin for the quarter shrank 450 basis points to 12.1%.
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