McDonald’s Profit Surges 11%, Thanks to Menu Revamps and Longer Operating Hours
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The world’s most recognizable fast-food chain, McDonald’s, has had a good year. The top sponsor for the 2012 London Olympics reported a fourth quarter profit of $1.38 billion, up almost 11 percent from a year ago.
McDonald’s strong performance beat analysts’ expectations for the company, as revenue jumped 9.8% to $6.82 billion.
Analysts had previously doubted the company’s ability to grow during the economic downturn, especially with higher menu prices.
The world’s most recognizable fast-food chain, McDonald’s, has had a good year. The top sponsor for the 2012 London Olympics reported a fourth quarter profit of $1.38 billion, up almost 11 percent from a year ago.
McDonald’s strong performance beat analysts’ expectations for the company, as revenue jumped 9.8% to $6.82 billion.
Analysts had previously doubted the company’s ability to grow during the economic downturn, especially with higher menu prices.
Menu prices jumped three times in 2011, equivalent to a 3 percent increase for the entire year.
With the strong results, McDonald’s share price is up about 30 percent from a year ago and recently reached an all-time high of more than $102.
The results, which were helped by new menu items, restaurant makeovers, steady customer traffic, longer operating hours and effective marketing, defied a global economic slowdown and helped McDonald’s outpace traditional rivals like Burger King and KFC.
At McDonald’s, nearly 40 percent of its U.S. outlets are now open 24 hours, up from almost 30 percent seven years ago.
Chief Financial Officer Pete Bensen said that while diners remained cautious about spending, they were not showing any signs of pulling back.
[quote]We’re really seeing no change in customer behavior, Bensen said.[/quote]Related News: Americans Love Their Coffee So Much, They Spend Over $1000 A Year On It
McDonald’s executives said they plan to spend $2.9 billion this year opening 1,300 new restaurants and remodeling more than 2,400 around the world to help perk up the brand.
However, there are concerns over the fast-food chain’s ability to perform this year. For one, the financial crisis is likely to affect McDonald’s operations in Europe, its top market for sales, or 40 percent of total revenues.
About 22 percent of McDonald’s revenue comes from Asia Pacific, Africa and the Middle East, up from 14 percent five years ago. That region grew revenue 13 percent over the year, faster than any other regions.
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Lazard Capital Markets analyst Matthew DiFrisco, speaking to Reuters, also added other items to the list of concerns.
Those included higher taxes and interest expense as well as increased spending on things like restaurant renovations, building new units, compensation and technology upgrades.
Related Infographic: Everything You Need To Know About The Big Mac Index From 2011
