McDonald's Sales Up

McDonald's says strong demand for breakfast items helped lift global same-store sales 8 percent in July. The fast-food giant appears to be turning itself around, possibly helped by the recent demise of Bennigan's and similar restaurants.

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Not every business has been struggling in the rocky U.S. economy. For the Golden Arches, the downturn has been a boon. Sales of the Big Mac and breakfast sandwiches are up, way up, and they helped boost McDonald's to a record performance on Wall Street.

NPR's Cheryl Corley reports.

CHERYL CORLEY: At Chicago's Navy Pier, there's lots of restaurants where people can eat - of course, this is a tourist spot. But there is always a steady line of customers at McDonald's, even for breakfast.

Ms. AMANDA CAROL(ph): I'm Amanda Carol(ph). I am eating a sausage, egg and cheese McGriddle with a hash brown and orange juice.

Mr. BILL TOOLE(ph): I'm Grandpa Bill Toole, and I'm eating an Egg McMuffin and a senior coffee.

CORLEY: Three others at the table had breakfast sandwiches, too. McDonald's spokeswoman Heidi Barker says it's those types of meals that helped boost sales for the world's largest restaurant chain to an overall global increase of 8 percent in July, and here in the U.S. to 6.7 percent.

Ms. HEIDI BARKER (Spokeswoman, McDonald's): Breakfast is widely popular in the U.S. We're the leader at breakfast. It's our most popular day part and most profitable day part in the U.S. Our new product, Southern-style chicken biscuit - Southern-style chicken sandwich, and also there is a great promotion this summer with the Big Mac sandwich. And that helped to fuel the performance in July.

CORLEY: Restaurant analysts had expected McDonald's to do well, but not this well. Morningstar analyst John Owens says some casual dining establishments like Bennigan's, which filed for bankruptcy, have felt pressure from a slowing economy. Cash-strapped consumers hit with high fuel and grocery prices have been scaling back.

Mr. JOHN OWENS (Analyst, Morningstar): So what we've seen is some customers are trading down from those type of restaurants to fast food establishments like McDonald's. So to a degree, McDonald's has benefited from this.

CORLEY: Exactly what Bill Toole, back at Navy Pier, thinks.

Mr. TOOLE: And for $22, there's five of us that have eaten, and we've all had juice and coffee and everything that we wanted. For 22 bucks, that's not bad for five people.

CORLEY: Mm-hmm.

Mr. TOOLE: You know.

CORLEY: What has also helped McDonald's bottom-line grow is its dollar menu. But with the hike in the cost of commodities and menu prices that remain flat, analyst John Owens says change is likely. Even so, he expects McDonald's to do just as well next month, and one of the biggest reasons why is the convenience of the chain's locations.

Mr. OWEN: And in this challenging consumer environment where people are concerned about how much gas they're using, usually if they want to go out to a restaurant, McDonald's is closer to them than its competitors.

CORLEY: McDonald's shares rose to an all-time high today on the New York Stock Exchange at nearly $64 a share, after the company reported its July sales numbers.

Cheryl Corley, NPR News, Chicago.

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