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The Honolulu Advertiser
Posted on: Tuesday, March 11, 2008

Focus on new breakfast items, coffee pays off for McDonald's

By Dave Carpenter
Associated Press

Hawaii news photo - The Honolulu Advertiser

McDonald's Corp. yesterday reported double-digit sales growth in its U.S. restaurants last month, accompanied by even stronger growth at its European outlets, such as this branch in London.

ASSOCIATED PRESS FILE PHOTO | February 2008

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CHICAGO — Consumer spending and confidence may be waning, but people still need that jolt of morning caffeine to wash down an egg sandwich.

McDonald's Corp.'s big push on coffee and new breakfast items in its U.S. restaurants contributed to a double-digit jump in same-store sales last month, accompanying even stronger growth in Europe, the company said yesterday.

The world's biggest fast-food chain reported that sales from its outlets open at least 13 months climbed 11.7 percent over a year earlier — evidence that the economic slowdown hasn't dealt it the blow that some investors had earlier feared.

While its new specialty coffees won't be available in all its U.S. restaurants until next year, analysts said they have heard positive feedback on how the products are faring in the 1,000-plus McDonald's where they are served. In the meantime, the company said the premium roast coffee it rolled out two years ago helped fuel U.S. same-store sales growth of 8.3 percent in February.

The new McSkillet breakfast burrito also aided February numbers, as did the weak dollar at international restaurants and the benefit of an extra selling day. The leap year boosted same-store sales by about 4 percent in all, the Oak Brook-based company said.

European same-store sales grew by an impressive 15.4 percent on strong results in Britain, France, Germany and Russia.

Two straight months of solid results to start the year have reassured investors worried about the impact of the economic slowdown. McDonald's shares rose $1.53, or 2.9 percent, to close at $53.80 yesterday.

"We continue to believe that McDonald's is well-positioned to navigate through domestic economic challenges given its tiered menu platform which offers a broadly appealing mix of everyday value and premium new product news," Goldman Sachs analyst Steven Kron said in a note to investors.