CHICAGO – McDonald's dollar menu keeps gaining fans in the recession, and its profit rose last fall, but the world's largest burger chain said Friday that its annual revenue slipped for the first time in at least a quarter century.
Analysts said McDonald's fortunes won't dramatically increase until the economy — especially the U.S. unemployment rate — does.
"If it does improve, I think things will definitely get better," said Morningstar analyst R.J. Hottovy.
For the three months that ended Dec. 31, McDonald's rang up revenue of $5.97 billion — 7 percent more than the same period last year.
Falling commodity costs and currency fluctuations helped boost the company's fourth quarter profit, which amounted to $1.22 billion, or $1.11 per share. That's 23 percent more than the same period last year when McDonald's profit amounted to $985.3 million, or 87 cents per share. Excluding one-time items, McDonald's earned $1.03 per share. That was a penny per share above Wall Street's average forecast.
For the full year, McDonald's profit climbed 6 percent to $4.55 billion, or $4.11 per share.
Sales growth at its restaurants that have been open at least a year, considered a key figure, slowed in the fourth quarter as penny-pinching diners tried to cut back still further. Its Angus burgers and coffee were among the top sellers.
The figure, important for restaurants and retailers because it excludes the effects of stores opening and closing during the year, grew 2.3 percent worldwide for the fourth quarter and 0.1 percent in the U.S., McDonald's said Friday.
That was the figure's weakest quarterly increase in at least three years.
And McDonald's overall revenue slipped 3 percent to $22.74 billion — its first annual decline since at least 1984, according to figures in regulatory filings.
Still, McDonald's did markedly better than nearly all its fast-food competitors, who have been slashing prices — at the expense of profits — to get customers in the door as the economy lumbers toward recovery.
"In this challenging economic environment, we feel very good about our trends," CEO Jim Skinner told investors during a conference call.
Skinner said the company expects its January sales in U.S. stores that have been open at least a year to be "relatively flat."
"This is still better than most other burger chains are doing," Janney Capital Markets analyst Mark Kalinowski told investors in a research note. Much of that is because of its massive size and its ability to manage its stores and costs well, analysts said.
Industrywide figures aren't yet available for the fourth quarter. But research firm NPD Group estimates that customer visits to U.S. fast-food restaurants sank 4 percent during the previous quarter, the months of July to September.
McDonald's is based in the Chicago suburb of Oak Brook, Ill.
Its shares climbed 73 cents, or 1.2 percent, to $63.93 in late afternoon trading Friday.