McDonald's US Sales Getting Boost

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By Paul Ziobro, Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- McDonald's Corp.'s (MCD) domestic same-store sales are getting the biggest boost from breakfast and snacking items, helped by recent launches of a $1 breakfast menu and the Mac Snack Wrap, McDonald's Chief Financial Officer Pete Bensen said Wednesday.

Otherwise, the fast-food giant isn't seeing anything "dramatically different" in consumer behavior during the last several months in the U.S., where McDonald's recently reported a slight increase in same-store sales in February, outperforming its competitors.

McDonald's average sale has also been "relatively stable" this year, but has taken "a little bit of a hit" during breakfast due to the new bargain menu.

Bensen, speaking at a Bank of America/Merrill Lynch conference, also said McDonald's expects price increases in 2010 to be below historical levels.

McDonald's typically raises prices between 2% and 3% each year to help keep pace with inflation in food and other costs, but Bensen said that any increase this year "will probably be less than that." The fast-food chain has spoken of diminished pricing power in recent months, though it comes at a time when commodity costs are expected to be benign.

"Right now as we sit, we don't see a tremendous opportunity to take price," Bensen said. "But the fact that our cost environment is so good, that's not troubling to us."

The Mac Snack Wrap, priced at $1.49, is also proving an attractive lure to get customers to trade up from the Dollar Menu. Bensen said 40% of Mac Snack Wraps sold are to customers who would have otherwise bought an item for $1.

McDonald's focus for the upcoming year lies in menu innovation, with beverages like frappes and smoothies planned for launch in the coming months, and improving service with new cash-register systems and double drive-through lanes with screens that display orders.

It's also renovating more than 2,000 restaurants this year. In the U.S., Bensen said McDonald's contribution to store remodels will likely be similar to the amount it spent during the installation of McCafe, when McDonald's paid for 40% of the costs needed to upgrade buildings.

McDonald's shares, flat in recent trading at $65.10, are up 24% over the past year.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;