McDonald’s Comparable Store Sales Flat in July

by Tom Carlson | Thursday, Aug 9, 2012 | 390 views

McDonald’s Corporation (NYSE:MCD), which bills itself as “the world’s leading global foodservice retailer with more than 33,500 locations serving approximately 69 million customers in 119 countries each day”, announced that comp sales were flat in July. However year-to-date comp sales through July are up 4.5%.

 

Comparable store sales (“comp sales”), also known as same-store sales, is a measure of sales of stores open more than a year against their sales the prior year. It is a key metric for retailers.

 

In computing its comp sales, McDonald’s includes both company-owned and franchised stores that have been open at least thirteen months, and factors out changes in foreign exchange rates. This means comp sales measurements are driven mainly by customer count and average check value. Average check value in turn is affected by pricing and product mix.

 

The company essentially attributed the flat comp sales to the economy. But many other sources point to aggressive promotions by competitors.

 

In its press release reporting July’s comp sales, the company’s CEO said he was confident McDonald’s will succeed and that management had the experience to build sales and market share, even in the “challenging” environment. An example of their efforts might be the company’s new plans to begin offering, initially on a test basis, breakfast items beginning at midnight in its 24 hour stores.

 

McDonald’s has been a top performer over the long haul. It’s unlikely that one month’s, or even a quarter’s, results are a sign of the decline of McDonald’s.

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