Same-store sales growth
Same-store sales growth, expressed in percentage, is a measure of the increase in revenue from existing restaurants over a certain period (year-over-year in this article). Same-store sales growth is affected by transactions or traffic and average check size. To gain more information on same-store sales growth, you can read An in-depth overview of the US restaurant industry.
Expectation of same-store sales growth in 4Q15
With McDonald’s (MCD) introduction of the all-time breakfast menu in October, analysts are expecting US same-store sales growth to increase in 4Q15. Earlier in 3Q15, McDonald’s reported a same-store sales growth of 4%. A recent market survey conducted by NPD Group revealed that the introduction of all day breakfast has increased the restaurants’ traffic in US. Also, analysts expect that the adoption of reorganization strategy could help the company in implementing strategies based on their market performance, which could boost same-store sales. With all these positive news around the analysts are expecting the same-store sales growth to increase by 2.7% in 4Q15 globally.
Earlier in 3Q15, the introduction of the crispy buttermilk chicken deluxe sandwich and the reintroduction of Egg McMuffins drove US same-store sales, with the business segment clocking a growth of 0.9%.
By focusing on product innovations, a value menu, and more time-limited offerings, McDonald’s was able to increase its same-store sales in 3Q15 globally. Analysts expect this trend to continue in 4Q15 as well.
In 3Q15, the international lead markets segment reported a growth of 4.6%, with Australia, Canada, and the United Kingdom reporting strong performance. China, which encountered supplier issues last year, led growth in the high-growth market, which clocked a growth of 8.9%. During the same period, the foundation markets and corporate reported an increase of 6.1% in its same-store sales growth.
Since the majority of McDonald’s revenue is derived from international markets, we’ll analyze the effects of a strong dollar on its revenues in our next article.
Investors can gain exposure to McDonald’s (MCD) by investing in ETFs such as the iShares US Consumer Services ETF (IYC). IYC has invested more than 3.5% of its portfolio in McDonald’s and also has holdings in Starbucks (SBUX), YUM! Brands (YUM), and Chipotle Mexican Grill (CMG).