McDonald's Sees Positive Results From Price Hike

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McDonald's Sees Positive Results From Price Hike


OAK BROOK, Ill. -- McDonald's latest pricing strategy, which included a 1-percent increase in March, has paid off by pulling the quick-service chain's check average out of negative territory, Nation's Restaurant News reported, citing a securities analyst.

McDonald's officials disclosed to analyst Andy Barish, of Jefferies & Co., that the company's average check in March was flat compared with a year ago at its more than 14,000 U.S. restaurants. Barish estimated that McDonald's 3.8-percent increase in same-store sales last year included a 1-percent decline in check average, according to the report.

Barish, who recently met with Pete Bensen, McDonald's chief financial officer, and Dave Garland, CFO of the company's Asia/Pacific, Middle East and Africa division, wrote in a research note: "We came away with increased confidence in the U.S. and APMEA businesses, as domestic same-store sales start to benefit from a flattening check average and Japan starts to recover. Near-term, we see opportunities for margin-positive chicken line extensions, while bigger new product news likely [would come] in 2012 and 2013."

Barish said McDonald's will deploy a steady stream of new products this year, but not to expect any "blockbusters" to match the recent rollouts of Angus Third Pounders or Real Fruit Smoothies.

"We would expect a lot more chicken news -- some planned and some opportunistic given commodity favorability of that protein -- including current McChicken sandwiches and a relaunch later in the year of the premium chicken sandwich lineup," Barish said. "Frozen Strawberry Lemonade should be in the local McDonald's any day now."