McDonald's builds profits and sales with chicken, credit cards
Last Updated: Friday, April 21, 2006 | 4:55 PM ET
CBC News
Based in the Chicago suburb of Oak Brook, Ill., the fast-food chain reported an operating profit of $923.8 million US in the first quarter this year, up two per cent over the same period last year. Revenue rose six per cent.
McDonald's share price (NYSE:MCD) fell 48 cents on the New York Stock Exchange to close at $34.60 US.
McDonald's also did well in comparable restaurant sales, a key industry measure. They rose by seven per cent over the past year.
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This was the 36th consecutive month of rising sales for a fast-food chain that lost its way in 2003 as it searched for a new look and new products.
The company's share price bottomed out at about $12.50 US early that year.
But McDonald's has come up with a series of popular new products in recent years, including spicy chicken sandwiches and better coffee. It also features longer hours, new-look restaurants and credit card readers that allow customers to pay for their hamburger with plastic.
Chicken is clearly a key part of the new formula. In the United States last year, the chain sold more chicken than beef.
McDonald's hopes to build on its momentum next week when it comes out with a new menu that includes an Asian salad of chicken, orange slices, peppers and almonds with a ginger sauce.
Operating income for McDonald's rose in the first quarter, but net income fell by 14 per cent, to $625.3 million or 49 cents a share, from last year's first quarter when the company included a sizable tax benefit in its results.
Meanwhile, the company said it is asking European suppliers to bring free-range chickens indoors to try to contain the spread of bird flu.
"We are now imposing standards which require that those free-range chickens that are producing free-range eggs be brought into houses because of the threat of the spread of avian influenza," said Catherine Adams, vice president worldwide quality at McDonald's.
The new standard will apply to birds that are used to produce meat as well as eggs.
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