Seeking Alpha
Long/short equity, tech, ETF investing
Profile| Send Message|
( followers)  
Excerpt from McDonald's Q1 conference call transcript:

Michael Roberts, President, Chief Operating Officer, Director

China continues to represent enormous opportunity for McDonalds, with comps up YTD. We’re growing the business there through food relevance, with the chicken burger and the spicy chicken filet. Drive Thru expansion, compelling everyday value and telling the story of the quality of our food, where we’re running quality print ads in the recently launched askme.com, a public information website dedicated to food safety and the quality education of all of our guests.

Matthew Paull, Chief Financial Officer and Corporate Senior Executive Vice President

Moving now to Asia Pacific, this segment generated a 140bp improvement in company-operated margins. This was driven by strong results in Australia and improved results in Hong Kong and China. Australia continues to drive transactions with locally-relevant menu options like Espresso Pronto Coffee and a range of seven deli-choice sandwiches. Regarding China, I was just in China three weeks ago and was very excited about what I saw. We are offering customers locally-relevant menu options like the ones you heard Mike describe, and we’re also excited about the current test of products like the rice burger, which features spicy chicken or beef, with red cabbage and lettuce on toasted sticky rice instead of a bun. We are becoming a more convenient option for our Chinese customers, through better site selection and Drive Thru expansion.

Adding Drive Thrus the way we at McDonalds do Drive Thrus has brought a unique convenience to the market. Although building a restaurant in China with a Drive Thru costs 30-50% more, or about $200,000 more, we are achieving 50-80% higher sales volumes, clearly a very good investment. In 2004 alone, there were 2 million more cars on the road in China than in the prior year. Both car ownership and traffic are growing in China at explosive rates, with plans to add many more Drive Thrus in the next few years, we are poised to capture the opportunity.

Source: McDonald's Discusses Chinese Car Ownership and Drive-Thrus (MCD)