Ralph Alvarez, CEO, said in a conference call with financial analysts that the worldwide chain in the past 12 months has reduced the number of company-owned restaurants by 1,200, or 5%, and that the chain's company-owned stores now account for 22% of its locations, down from 27% before the reduction. "As we look to optimize our business, we will continue to evolve our ownership mix," Alvarez told the analysts.
The McDonald's CEO noted that the company closed a transaction during the third quarter in which it switched restaurants to franchise ownership in 18 Latin American countries. At the same time, the company's Latin American operations posted an 18.3% increase in comparable sales, one of a number of strong comp sales figures in the various geographic divisions of the company's operations.
"Each area of the world contributed to our success," Alvarez said, pointing out that comp store sales rose 6.5% in Europe, 5.1% in the US and 11.4% in the Middle East, Asia and Africa division, the highest quarterly comp figure in 10 years for that division.
In the US, Alvarez called the results "especially impressive when put into the context of a drop in consumer confidence and the higher gas prices that are impacting the overall industry." Alvarez commented in the conference call that the McDonald's decentralized organization "is a competitive advantage because it enables each area of the world to implement aggressive, locally relevant strategies that ensure that the brand will appeal to their customers." Each geographic region has "the flexibility to emphasize different business drivers for their specific market conditions," he said. The restaurant chain achieved its results despite what Alvarez called "a more challenging worldwide commodity and labor environment."
The increased net income this quarter worked out to 89 cents per diluted share, up from 68 cents per diluted share in the third quarter of last year. The figure included an after-tax gain in discontinued operations of six cents per share from the sale of Boston Market.
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