Mcdonalds Happy Meal

Commodity Costs, Consumer Advocacy Backlash No Match for McDonald's

Despite rising commodity costs, anti-obesity trends and challenges from consumer advocacy groups about the hamburger giant's practices on marketing to children, McDonald's posted second-quarter results that surpassed analysts' expectations, thanks in part to a strong marketing push.

Global same-store sales were 5.6% and net income up 15%, to $1.4 billion. Total revenue for the company was $6.9 billion, up 16% from the same quarter in 2010. Same-store sales were up 4.5% in the U.S., 5.9% in Europe and 5.2% in Asia-Pacific, Middle East and Africa. The company posted earnings of $1.35 per share. The average estimate of 22 analysts surveyed by Bloomberg was $1.28 a share.

McDonald's June same-store sales rose 7.7% globally, the largest monthly increase since November 2008. In the U.S., same-store sales climbed 6.9% in June, the biggest gain since February 2008, according to Bloomberg.

"Our performance has been driven by a combination of everyday value, the introduction of compelling new menu items, a sustained focus on core favorites and an ongoing emphasis on improving restaurant operations," said President-Chief Operating Officer Don Thompson during today's earnings call.

Janney analyst Mark Kalinowski noted "impressive same-store sales trends in the U.S., which we believe are attributable to best-in-class store-level execution," in a report issued today. "We believe that McDonald's will continue to grab additional market share in all three major geographies." Indeed, in 2010, McDonald's managed to eke out an additional share point in the U.S., up to 48% of sales in the hamburger category, according to Technomic.

McDonald's also reiterated anticipated commodity costs for this year rising by 4% to 4.5% in both the U.S. and Europe.

One of the bright spots for McDonald's has been its McCafe line of beverages, which it began rolling out nationally in May 2009. New McCafe beverages like the frozen strawberry lemonade helped the McCafe brand's sales rise "29% over second-quarter 2010 on top of the gains realized last year and we're still featuring dollar soft drinks and sweet tea in the majority of our restaurants" said Mr. Thompson.

At a time when fast feeders are still marketing heavily discounted items -- though increasingly less so -- McDonald's in the U.S. has been promoting its flagship products such as the Big Mac and Chicken McNuggets. Mr. Thompson said that advertising the Big Mac in and the Quarter Pounder "drove sales up double-digit," and the promotion of the "sharable" 20-piece McNuggets and new dipping sauces also "delivered positive results.

McDonald's Happy Meal Toys to be Banned in San Francisco? - People ...

McDonald’s Happy Meal Toys to be Banned in San Francisco?

McDonald’s Happy Meal Toys to be Banned in San Francisco?

We know that fast food is bad for us. It’s filled with excessive calories, sodium and fat. It’s “meals” are often based largely on meat, which is very damaging to the environment as well as our health.

Yet, we seem to think it’s completely alright to use toys and other kid-oriented incentives to entice children to eat fast food and get them hooked on the habit early. McDonald’s, alone, spends hundreds of millions a year on toy promotions…. And it rakes in -50 billion a year from kids 12 and under, plus another 0 billion on “family” purchases.

Well, apparently some folks in San Francisco have decided that this is completely inappropriate and predatory marketing.

Last week, the San Francisco Board of Supervisors Land Use Committee voted 3-0 in favor of an ordinance (PDF) to limit toy giveaways in children’s meals that have excessive calories, sodium and fat.

“Our children are sick. Rates of obesity in San Francisco are still climbing, and among children of color in particular. Restaurants in San Francisco should be providing healthful food choices for our families,” said ordinance sponsor Supervisor Eric Mar. “This is a challenge to the industry to think about children’s health first.”

If fast food restaurants add more fruit and vegetables and limit the calories, using toys would still be acceptable according to the ordinance – (not something I’m thrilled with anyway, but good if they can at least use this to make the food healthier).

While this ordinance would be for all restaurants, its clear focus is McDonald’s and its famous Happy Meals (which are even popular here in Poland).

The full Board of Supervisors will vote on this ordinance later this month

Apparently, this has really gotten McDonald’s attention.

Markie McBrayer of Corporate Accountability International wrote to me:

“This ordinance has struck a deep nerve with the industry – a clear indication of the primacy of predatory marketing to its business model. McDonald’s and the fast food industry have launched an all out PR offensive to influence the political process.

Where McDonald’s usually hides behind its trade association to avoid tarnishing its public image, it has come out from behind the curtain to oppose the policy. It has taken out a full-page ad in the San Francisco Chronicle, flown top executives in for a series of behind closed doors meetings aimed at getting Supervisor Mar to compromise or pull the policy, and threatened a lawsuit if all else fails.

McDonald's Happy Meal toys in the U.S.A.

McDonald's Happy Meal Toys from the Nineties

McDonald's Happy Meal Toys from the Eighties

Negotiating critical literacies with young children

McDonald's Happy Meal toys around the world