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McDonald's (MCD)
McDonald's Sales Jump 2.2% in August
McDonald's is not traditionally known for gourmet-specialty coffees and Angus burgers, but the world's largest fast food chain is working hard to change that perception. The Golden Arches has launched a menu full of new food items this summer in an attempt to increase in sales. McDonald's has gravitated towards more premium offerings while most of its competitors are promoting discount oriented dining options like Burger King's $1 Whopper Junior and Wendy's 99 cents Double Stack burger. The recent economic downturn has amplified the competition as the fast food restaurants battle over market share. How is McDonald's strategy stacking up against the rest of the industry? Did sales improve for the fast food titan?
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McDonald's experienced a 2.2% jump in overall sales for the month of August. The Golden Arches relied heavily on the release of its $3.99 Angus Third Pounder and new line of McCafe coffee drinks to drive sales. For the most part, the new product offerings seemed to work. The world's largest fast food restaurant saw sales increase everywhere, but in Asia, the Middle East, and Africa. However, McDonald's United States sales only managed to grow 1.7%. The increasing competition from Burger King and Wendy's seems to be eating into McDonald's new product momentum. There is also a concern that McDonald's higher price points are just not in align with its customers' needs. Unfortunately, menu pricing warfare is not McDonald's only problem.
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The fast food juggernaut is fighting a multi-front war. McDonald's is also experiencing a decline in its breakfast business. The increasing unemployment rate means less morning commuters, which is hurting breakfast sales. However, the unemployment rate effect does not stop there. It has trickled down to the teenage summer-job demographic. A customer segment that McDonald's usually relies on for a summertime boost in sales. The combination of a decline in business commuters and summertime employees has been an unwelcomed change for McDonald's breakfast.
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McDonald's is happy to see an overall increase in sales during August, but has to be a little concerned that the US market growth is slowing down. The fast food icon believes that new menu items will help expand its market share and win over new customers as its product promotion continues. McDonald's is also trying to stop the bleeding with its breakfast sales. The new McCafe coffee line could be the much needed band aid, but it may not be enough. The fast food titan needs to find a way to entice the shrinking business commuter segment to the Golden Arches. McDonald's is hoping to grill out the competition with its new, premium product offerings.
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More McDonald's News
McDonald's Is McStymied -- McDonald's losses courtroom battle over "Mc" prefix. The outcome only adds to McDonald's Asia market troubles.
McDonald's Offers Busy Commuters a Free Ride and 75,000 Free Angus Third Pounders -- McDonald's launches new "Try Free, Ride Free" promotion to attract business commuters and advertise its new burger.
Starbucks Bracing For 'Tough' Consumer Recovery -- McDonald's new campaign targeted directly at Starbucks. McDonald's attacks Starbucks for being too expensive.
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