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McDonald’s Sales Jump Thanks To Higher Prices

by on May 9, 2011

Huffington Post…

LOS ANGELES/CHICAGO (Lisa Baertlein and Jessica Wohl) – McDonald’s Corp posted a better-than-expected 6 percent rise in April sales at established restaurants, helped by menu price increases that helped offset higher costs for beef and other ingredients. Shares in the world’s biggest hamburger chain rose almost 1 percent in early trading on Monday, after it reported that April sales at restaurants open at least 13 months were up 4 percent in the United States. Same-restaurant sales rose 6.5 percent in Europe and 6.5 percent in its Asia/Pacific, Middle East and Africa (APMEA) unit, reflecting strong results from China and Australia and a surprise rebound in Japan — which is still recovering from a massive earthquake. Analysts were expecting U.S. sales to rise 3.3 percent. They also expected a 5.1 percent rise in Europe and a gain of 2.7 percent in APMEA, Jefferies & Co analyst Andy Barish said in a client note. The company in March put through a 1 percent menu price rise in the United States, where it plans additional increases. Prices in Europe are up by the same amount, and the company plans to raise prices in China. “McDonald’s top line momentum is going to hold up just fine,” especially with the price increases, said Morningstar analyst R.J. Hottovy. The bigger question, he added, is how much the aggressive rise in food costs will pressure margins. McDonald’s expects food costs to rise between 4 percent and 4.5 percent in the United States and Europe this year. Europe is McDonald’s biggest market, contributing roughly 40 percent of sales, and the United States is a close No. 2 at around 35 percent of sales. McDonald’s generally has an edge over rivals when it comes to raising prices because it attracts a higher-income diner than other fast-food chains — particularly in Europe. Analysts say it would have the least resistance if it boosted prices on premium burgers and McCafe drinks that appeal to those customers. In addition to advertising pricier products such as new beverages, McDonald’s has been catering to budget-conscious diners with its value menu. The chain’s broad appeal may give it an edge over smaller chains, such as Wendy’s/Arby’s Group Inc or Jack in the Box Inc, Hottovy said. Many analysts believe that the company’s top priority is getting more customers through the door. “We believe the company will be judicious with menu pricing and focus on traffic gains,” Barish said. McDonald’s shares were up 68 cents at $79.38 in morning trading on the New York Stock Exchange. (Reporting by Brad Dorfman, Lisa Baertlein and Jessica Wohl; Editing by Derek Caney and John Wallace) Copyright 2011 Thomson Reuters. Click for Restrictions .

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McDonald’s Sales Jump Thanks To Higher Prices

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Lita Smith-Mines: The Signs, They Are A-Fadin’

by Lita Smith-Mines on October 26, 2010

Driving along a large retail road the other evening, I wondered where the florist on a very busy corner went. Moreover, what the heck was ORIS, which the display sign proclaimed was sold there instead? Nearby there was an ELI and a KE SHOP and a CE BA. Across the street was a JEWE and a MAR AR STUD. Further down I spied TY SUPPLIES, ACY and SSAGES. Had all the local businesses failed, and what were these strange stores peddling? Now that I was focusing, I saw that more than a few of the retail establishments bearing the name of my home town of Commack now had only the letters ACK or MMA or COMM lit up across the front of their store. It dawned on me that I didn’t happen to drive down the turnpike on the day a bulb or two burned atop one store or another. What I was seeing was the combined neglect of many retailers (or landlords), who individually may have thought better of shelling out the money it took to restore the B and the A and the G over the bagel store or to pay the electric bill for a lighted logo display during this depressing recession. Maybe there were bigger priorities than reenergizing the CHIN above the store that now proclaimed it sold ESE FOOD. If the ingredients couldn’t be bought and the cooks paid, the restaurant would surely go under. From the looks of it, perhaps the store that caters to “big & tall” men needed to worry about paying for the merchandise on its shelves. In that case, it might be understandable why they delayed fixing the G & TALL ME sign. Landlords with fewer tenants could certainly plot out a way to string along the last few renters by postponing the maintenance on a shopping center’s nighttime signage. As an observer merely driving by store after store after store adorned with strange arrangements of letters, I cannot know how much thought each retailer or property owner puts into the lighted logos. It is logical to suppose that they spend their days and nights worrying about paying for inventory, meeting payroll, and otherwise finding the cash to keep their doors open. However, I do know that the local mom & pop, bricks & mortar establishments are having a hell of a time surviving this economic climate. Thus, the lack of illumination at such stores can’t bode well for their continued existence. How will things improve for the pizza store that will bring the food to me if the glow above their doorframe shouts WE DELIV? Will anyone driving along at night know that a local jeweler guarantees to pay the best price for gold if all they see is W PAY TOP $$ FO? If a hungry driver is looking on both sides of the street for an enticing place to stop, I’m willing to bet that the eatery offering BUG & FRI is probably not going to be very tempting.

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Coca-Cola Agrees to Buy Coca-Cola Enterprises’ North America Bottling Unit

February 25, 2010

By Andrew Dunn Feb. 25 (Bloomberg) — Coca-Cola Co. , the world’s biggest soda maker, agreed to buy the North American operations of bottler Coca-Cola Enterprises Inc. , more than six months after PepsiCo Inc. moved to bring its bottlers in-house to cut costs. The bottler’s investors will get $10 and one share in a new bottling company for each share they hold, Atlanta-based Coca- Cola said today in a statement. Coca-Cola will also assume $8.88 billion of the bottler’s debt . Coca-Cola Enterprises agreed to buy Coca-Cola’s bottling operations in Norway and Sweden and will have the right to buy Coca-Cola’s stake in its German bottling operations. Coca-Cola said the takeover may save $350 million over four years. As soft-drink volume sales in the U.S. market have declined since 2005, Coca-Cola Chief Executive Officer Muhtar Kent has introduced new packaging and pricing for Coca-Cola in North America to draw customers in addition to cutting supply- chain costs. “Coca-Cola will streamline the North American operations, but eventually will look to sell,” Kaumil Gajrawala , an analyst at UBS Securities LLC in New York, wrote in a note yesterday after reports that a transaction was being discussed. Coca-Cola Enterprises, based in Atlanta, rose $5.82 to $25 at 8:22 a.m. New York time, before the start of regular U.S. trading. As of yesterday’s close on the New York Stock Exchange, the company had a market value of $9.4 billion. Coca-Cola rose 33 cents to $55.16 in New York yesterday. The stock rose 26 percent last year, while PepsiCo advanced 11 percent. Capital-Intensive Coca-Cola and PepsiCo sell beverage concentrate and syrup to licensed bottlers, which add water and other ingredients, put the mixture in bottles and cans, and sell it. In 1999, PepsiCo followed Coca-Cola’s lead by spinning off its capital-intensive bottling operations to create Pepsi Bottling Group Inc. Coca-Cola currently owns about 34 percent of Coca-Cola Enterprises, a stake it values at $3.4 billion. The transaction should close in the fourth quarter of 2010, according to the statement. Coca-Cola said the takeover will give it direct control over about 90 percent of North American volume. PepsiCo, the second-largest soft-drink maker, agreed in August to take control of its two biggest bottlers for about $7.8 billion. Those purchases may allow PepsiCo to garner about $400 million annually from cost savings and improved revenue opportunities, the company said this month. North American volume at Coca-Cola Enterprises declined 5 percent last year, while net pricing per case increased 6.5 percent, the company said in a Feb. 10 earnings report. To contact the reporter on this story: Andrew Dunn in New York at adunn8@bloomberg.net

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Sun Hung Kai Shares Advance After $540 Million of Hong Kong Property Sales

February 22, 2010

By John Duce Feb. 22 (Bloomberg) — Sun Hung Kai Properties Ltd. shares jumped after the developer sold 900 homes in Hong Kong for HK$4.2 billion ($540 million) over the weekend, fueling speculation the city’s housing market is overheating. Shares of the world’s biggest developer by market value added 1.7 percent to HK$101.80 at 10:41 a.m. Hong Kong time after gaining as much as 2.5 percent. The apartments at the Yoho Midtown apartment complex in Yuen Long sold for an average HK$5,400 per square foot, Amy Teo, Sun Hung Kai project director, said in an interview. That compares with an average HK$3,000 per square foot for new homes in the area a year ago, according to Wong Leung-sing, an associate director at Centaline Property Agency Ltd. Hong Kong’s home prices surged 29 percent in 2009 as low interest rates and an increase in buying by mainland Chinese stoked demand. Norman Chan, chief executive of the Hong Kong Monetary Authority, told lawmakers Feb. 1 that the city faces a “huge” potential risk of bubbles forming in its asset markets given high liquidity. “All the ingredients are in place for a property bubble in Hong Kong, including low interest rates and limited supply, but I don’t think we are in one yet,” said Buggle Lau, chief property analyst at Midland Holdings Ltd. “If more speculators enter the market then it could push prices up too high.” The city had the world’s fastest-growing major housing market last year, according to a survey compiled by real-estate agents Knight Frank LLP. Crowds Attracted Some 120,000 prospective buyers have flocked to the show homes since Feb. 19, Teo said, speaking at the display properties set up in a shopping center near the apartment complex in the city’s northern New Territories . Sun Hung Kai increased the number of apartments on sale to 900 from 700 because of demand, she said. The building complex has a total of 1,890 homes, according to Teo. “I’m excited to buy, but I think it’s a little overpriced,” said Nelson Ma, 36, a worker at an export company who had just put down a deposit on a HK$3.4 million, 650 square foot, two-bedroom apartment. “I think there is a bit of a bubble but I’m not too worried as I will be living in the apartment rather than buying it as an investment.” Sun Hung Kai estimates about 80 percent of the purchasers intend to live in the apartments, with the remainder acquiring the properties as an investment, company spokeswoman Vivian Kwok said. About 40 units were immediately advertised for resale at asking prices of as much as 20 percent more than the original costs of purchase, the South China Morning Post newspaper reported, citing property agents. “The property market in Hong Kong is still hot, especially for new properties,” said Ng Sinwa, an estate agent at Midland Realty, who joined the crowds queuing to view the show homes. “People are still keen to buy.” ‘Go Pop’ Not all prospective buyers were sold on the properties available. “It’s so expensive,” Ivy Sze said, looking at the show homes on display. “It’s a bubble. We just don’t know whether prices will go up more, or just go ‘pop.’ We want somewhere to live so we just have to keep looking.” The number of private homes completed in Hong Kong last year fell 18 percent to 7,200 units, the lowest since 1997, the government said in a report Jan. 22. The city’s government is holding its first land auction of the year today in the Tseung Kwan O area to try to ease the shortage of supply, with price estimates for the site ranging from HK$2.6 billion to HK$3.4 billion. The city’s home sales more than doubled in value in January from a year earlier to HK$36.2 billion, according to figures released by the government’s land registry. Sales gained 4.1 percent last month from December, the agency said. The authority, Hong Kong’s de facto central bank, raised deposit levels for luxury apartments in October to try to cool lending. The government also plans to raise stamp duty, or transaction tax, on homes selling for more than HK$20 million to 4.5 percent from 3.75 percent in a bid to rein in the property market, the Chinese-language Sing Tao Daily said Feb. 11. ‘Still Affordable’ “Government intervention could lead to higher interest rates, but I can’t see mortgages rates much above 2.5 percent this year, which is unlikely to deter some buyers,” said Midland Holdings’ Lau. Some buyers’ confidence that property values will rise is underpinned by the city’s economic recovery, Centaline’s Wong said. “There’s talk of maybe 2 percent growth in GDP this year and there’s a feeling that the economy is improving,” he said. “People seem able to spend more than ever before on property.” Prices may rise as much as 15 percent in the first quarter, Wong said. Hong Kong’s Chamber of Commerce forecasts the city’s economy may grow between 3 percent and 4 percent this year. Higher interest rates and more speculators moving into the market are among the risks that may lead to a decline in prices, or drive them to unrealistically high levels, according to Lau at Midland Holdings. “This could lead to a bubble in the property market,” he said. “But if a bubble means people are now paying prices for property they can’t afford, then we’re not in one,” he said. ‘Property is still affordable. People still seem confident in the market.” To contact the reporter on this story: John Duce in Hong Kong at jduce1@bloomberg.net

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