McDonald's Corp. (MCD - Analyst Report) reported soft comps for the month of October. Though October global comps edged up 0.5% year over year, they were down compared to August comps of 1.9%. Global comps were down 1.8% during the previous year.
Comps for the segment were up 0.2%, better than a decline of 2.2% in Oct 2012. The improvement reflects the impact of limited-time offers for the popular Mighty Chicken Wings and Pumpkin Spice Latte beverage and the introduction of the new Premium Southwest McWrap. In the third quarter of 2013, results of which were announced late last month, U.S. comps increased 0.7%.
Despite the challenging macroeconomic conditions, the region experienced the highest comps growth of 0.8% driven by positive performance in the U.K., France and Russia, which made up for relatively lower comps in Germany and other markets.
Overall results in Europe were supported by the company’s attempts to fulfill demand via innovative value platforms and incessant popular seasonal food events. Comps were up 0.2% during the third quarter.
APMEA continued to underperform with comps down 2.8%, worse than a 2.4% decline in Oct 2012. The downside primarily reflects lower sales in Japan. Though the segment is continuously working to improve performance by providing consistent value offerings, accelerating growth in breakfast and leveraging brand extensions, its year to date sales were down 1.8%. Meanwhile, the region is experiencing higher labor and training costs due to new restaurant openings in China. During the third quarter, the region witnessed a 1.4% decline in comps.
McDonald's is working hard to continuously improve its top line by providing a varied menu to its customers. It intends to strengthen its domestic division by growing its everyday value options and bringing a balance between these options and proven core favorites.
However, decelerating growth in some regions of Asia, stiff competition in the U.S. and less pricing power in Europe remain matters of concern. The company presently has a short-term Zacks Rank #3 (Hold).
Among the stocks worth considering in the space are Buffalo Wild Wings Inc. (BWLD - Analyst Report), Bob Evans Farms Inc. (BOBE - Snapshot Report) and Burger King Worldwide Inc. . While Buffalo Wild Wings carries a Zacks Rank #1 (Strong Buy), Bob Evans Farms and Burger King Worldwide hold a Zacks Rank #2 (Buy).
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