MCD posted another strong month of comparables sales, with August 2-year trends improving sequentially from July in every segment. U.S. same-store sales were up 4.5%. Despite the strong top-line trends, I continue to be concerned about U.S. restaurants margins (which have declined for the last 6 quarters) as the company drives increased traffic with its Dollar Menu, but the August number was impressive nonetheless.
- August same-store sales grew 11.6% and 10% in Europe and APMEA, respectively. Even with this continued top-line momentum, one of my ongoing concerns stems from the company’s increasing foreign currency benefit, which will not be around forever. As I have said in the past, MCD Europe’s positive currency impact has grown rather steadily and has been beneficial to EBIT growth since 3Q06. Reported systemwide sales in Europe grew 21.5% in August, including an 8% currency benefit. This currency impact, although still significant, slowed from July when currency boosted systemwide sales growth by 13%. In APMEA, currency helped total sales growth by 6% in August (down from nearly 10% in July). Based on these results, MCD will still experience currency tailwinds in 3Q08, but we may have already seen the peak of the currency benefit.