McDonald’s Corp., one of biggest beef buyers, said comparable-store sales in the U.S. rose for the seventh consecutive month, though the burger chain’s global performance fell short of expectations amid weakness in France.
Sales at U.S. stores open at least 13 months increased 4.6 percent in August, Oak Brook, Ill.-based McDonald’s, the world’s largest restaurant chain, said in a report today. Global sales rose 4.9 percent, below analysts’ forecasts for a gain of about 5.3 percent.
For U.S. beef producers, McDonald's recent sales gains are “a positive thing,” said Glynn Tonsor, and assistant professor of agricultural economics at Kansas State University.
“It’s a signal that maybe some of us who have been pessimistic about U.S. demand have been a little too pessimistic,” Tonsor said in a phone interview today.
McDonald’s has long been a major customer for the beef industry. About a dozen of 22 sandwiches on McDonald’s menu feature beef, including the Big Mac, and the company has said it purchases about 800 million pounds of beef every year for its U.S. operations.
Based on U.S. Department of Agriculture data, McDonald’s beef purchases account for about 3 percent of annual U.S. beef consumption.
Still, though McDonald's is a key player in the foodservice industry, the restaurant chain mostly buys ground beef, some of which is imported from Australia and New Zealand.
McDonald’s buys a “relatively small percentage” of lean beef from Australia and New Zealand because of a shortage of the product in the U.S., company spokeswoman Lizzie Roscoe said in an e-mail today.
The company “remains one of the largest purchasers of U.S. beef, and where possible, our preference is to always purchase locally and domestically,” Roscoe said.
Meanwhile, demand for higher-value cuts, such as steaks, has been weaker, and the U.S. restaurant industry in general continues to struggle amid high unemployment, Tonsor noted.
“McDonald’s is just part of the broader demand story,” Tonsor said. “Beef export demand is strong… but domestic demand on other products is a little worrisome.”
Earlier this month, the National Restaurant Association’s said its performance index fell in August, the fourth consecutive monthly decline, after reaching a two-year high in March. The index, based on a poll of restaurant operators, reflects both current performance and future expectations.
U.S. per-capita beef consumption has declined most of the past three decades, and there’s no reason to expect that trend to change over the next few months, Tonsor said.
“Beef consumption is more tied to consumer incomes than pork or poultry,” Tonsor said, “Which is why the general economic climate is more important for beef. Beef moves more with the general economic climate.”
McDonald’s August sales in the U.S. were driven by newer items, such as fruit smoothies and frappes, that complemented the “everyday affordability” of its core menu, the company said today.
The company didn’t provide dollar sales figures in today’s report. During the second quarter, McDonald’s global revenue rose 5.3 percent, to $5.95 billion, the company said in July.
McDonald’s had 32,478 restaurants in 117 countries at the end of last year, including about 14,000 in the U.S.