McDonald's on Drive-Thrus, Avian Flu and Negative Comps in China (MCD)

posted on: January 25, 2006 | about stocks: MCD

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McDonald's (ticker: MCD) reported Q4 2005 earnings results yesterday. The following are excerpts from management's conference call with analysts:

Vice Chairman, CEO and Chairman of Exec. Committee Jim Skinner

We opened the first ever drive-thru in China last November and now have a total of three in the marketplace. These drive-thrus are outperforming the market average in sales and guest counts. And we'll profit from our first mover advantage by opening 12 more this year.

President and COO Mike Roberts

…. we've got a full menu there made up of beef and chicken. We're promoting beef at the moment and doing quite well, I would add. Obviously, with Avian influenza, there are significant concerns there, as you've heard from our competitors. But our chicken sales remain strong in China. And chicken and beef and pork are an important part of the Chinese diet and we offer all three.

CFO and Corp. SEVP Matt Paull

….we've had a negative comp a large part of 2005 in China. The whole industry has and our comps probably aren't as negative as some others, that has driven our returns down slightly. We are still very optimistic. We're not changing our opening plans. And returns aren't just problematic there because the up-front investment to open a restaurant is maybe 0.25 of what it is in the U.S. So, we're still very optimistic and we are proceeding with our opening plans.

(Quotes are from the CCBN StreetEvents transcript.)

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