McDonald's July sales recover in Europe, sustaining expansion

McDonald's Corp., the world's largest restaurant operator, said European revenue recovered in July as it took sales from rival chains, and the company will sustain plans to open at least 200 outlets a year in the region.

The fast-food chain is "in line" to open more than 200 new restaurants this year in Europe, and will open "at least the same" next year, Jerome Tafani, chief financial officer for the region, said in an interview from Paris yesterday.

"It's too soon to say if it's a long-term trend, but July will be stronger than June," Tafani said. "Like everybody, we are feeling the crisis. We have not changed our strategy and our market share in Europe as a whole is growing."

McDonald's yesterday reported sales growth that missed analysts' estimates as rising unemployment and a downturn in tourism weighed on western European markets including Spain and Germany. Europe is Oak Brook, Illinois-based McDonald's most important region by sales, generating more than 42 percent of revenue against 34 percent in the U.S.

There will be "fine-tuning" of McDonald's menus across Europe to include more discounts, Tafani said. In the U.K., which he called the company's best market in Europe, McDonald's introduced "little tasters" chicken wraps and hamburgers selling for 1.49 pounds ($2.46) to keep cash-strapped customers.

"I don't think it's the right time to invest in big, new ideas," he said. "The growth right now is based on what has worked before."

Sales at outlets open at least a year rose 3.5 percent in the U.S. and 6.9 percent in Europe during the second quarter, McDonald's said yesterday. The U.S. is still its most profitable market, accounting for around 48 percent of operating income.

Georgia, Ukraine

The only countries that Tafani named as targets for slower growth are Ukraine and Georgia, which have clashed with their former imperial ruler, Russia, in recent years. The company may "soften" the amount of new restaurants in those nations because of "political instability," Tafani said.

Ukraine, whose economy is contracting amid Europe's highest inflation rate, required a $16.4 billion bailout from the International Monetary Fund in November. Its governance has been hindered by a battle between President Viktor Yushchenko and Prime Minister Yulia Timoshenko, and voters go to the polls for a presidential election in January.

Georgia's army was routed in a five-day war with Russia last August, which led to separatist regions declaring themselves as Russian-backed sovereign countries.