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McDonald’s Corp. share price up, October sales beat projections as turnaround strategy gains traction

The biggest restaurant chain in the world – McDonalds Corp. – reported that October same-store sales surpassed analysts forecasts in a sign its turnaround strategy is proving to be successful.

According to the companys statement, global sales at stores open for more than a year declined by 0.5%. This result was better than the previously projected 2.2% drop. McDonalds also reported an improvement of its same-store sales in its domestic market from the 4.1% drop in September and reported a 1% decline in October.

“The U.S. is revamping its marketing approach, simplifying the menu and creating a new organizational structure,” McDonalds said in a statement.

The largest fast-food chain in the world is still facing some difficulties because of fierce rivalry in the U.S. It has also been hit by the consequences of its supplier scandal in Asia and by the political crisis in Europe.

The Chief Executive Officer of McDonalds Mr. Don Thompson also shared: “Although October results reflect our current business challenges, we are moving with a sense of urgency to improve the trajectory of our financial performance while taking the actions necessary to pursue the brand’s long-term potential.”

McDonalds currently owns more than 14 200 locations on its home market. The company is facing the challenge of constantly increasing competition from fast-casual chains such as Chipotle Mexican Grill Inc. That is why it has been recently focused on making its menu more attractive to customers, especially by expanding it with more customized options. The U.S.-based fast-food chain is also betting on reorganizing its domestic operations to improve efficiency.

One of the analysts, who work at Telsey Advisory Group – Mr. Peter Saleh said for Bloomberg that McDonalds sales in October were “very encouraging – the most encouraging I would say is the U.S. The traffic trend improved from September to October.”

McDonalds Corp. rose 0.01% on Monday in New York to close at $95.11 per share, marking a one-year change of -1.96%. The company is valued at $92.55 billion. The companys shares stood 0.01% higher at €76.510 in Frankfurt at 9:13 GMT. According to CNN Money, the 18 analysts offering 12-month price forecasts for McDonalds Corp. have a median target of $96.50, with a high estimate of $110.00 and a low estimate of $86.00. The median estimate represents a +1.46% increase from the last price of $95.11.

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