Burger Giant Expects Turnaround

McDonald’s Corp. said its slumping U.S. business should post improved results “as the year progresses” in 1997 while international operations should have an “excellent year.”

The company also said in its annual report that same-store sales in the U.S. fell 6.4 percent last year to an average of $1.43 million for stores open at least 13 months from $1.54 million in 1995. That’s a steeper decline than analysts had estimated.

McDonald’s said it will open fewer restaurants in the U.S. this year than last year, and that more than 70 percent of its 2,400 to 2,800 new restaurants planned for the year will open outside the U.S.

The company opened 726 restaurants in the U.S. in 1996 and 1,130 in 1995. The U.S. accounted for 27 percent of restaurants opened in 1996, compared with 47 percent in 1995 and 31 percent five years ago. Almost half of the restaurants opened in the U.S. in 1995 were small “satellite” outlets, compared with 25 percent in 1996.

“The 1996 decrease is consistent with our decision to reduce our focus on satellites and open fewer total restaurants in the U.S.,” the company said.

McDonald’s shares fell 25 cents to $49.62-1/2 in trading Wednesday on the New York Stock Exchange.

In the U.S., McDonald’s will try to reverse its declining same-store sales by building sales at existing U.S. restaurants through “aggressive marketing” and “a national value initiative,” the company said.

It also said it will stress food quality and service, particularly in its drive-through facilities, “where we already have a competitive advantage.”

Last week, Oak Brook, Ill.-based McDonald’s cut prices on its breakfast sandwiches in the U.S. to 55 cents with the purchase of a drink and certain side orders. Other sandwiches will be added to the promotion later.

Separately, McDonald’s said Wednesday that its Ty Teenie Beanie Babies promotion, offering miniature versions of popular beanbag creatures, will begin Friday. The McDonald’s replicas will be free with the purchase of a kids’ Happy Meal.

Overseas, “we are poised to have an excellent year” in 1997, the company said in the report. “We are committed to increasing market share through expansion” and growth in comparable-store sales.

In January, the company reported that its fourth-quarter earnings rose 12 percent. It also said it planned to close 115 of its satellite restaurants in the U.S. to improve earnings.