Earnings Preview: McDonald's twin challenges

McDonald's 3Q to show how company is addressing affordability, shifting tastes

Associated Press

NEW YORK (AP) -- McDonald's reports its third-quarter results on Monday, which should give a look at how the world's biggest hamburger chain is faring in its efforts to address shifting tastes and the demand for affordability.

WHAT TO WATCH FOR: The Oak Brook, Ill.-based company has been struggling to push up its sales at stores open at least a year, an important metric because it strips out the volatility of newly opened and closed locations.

McDonald's Corp. is taking a two-pronged approach. On the one end, the company has been playing up its Dollar Menu and other affordable options to draw in customers who may be watching their spending carefully in the weak economy. The strategy has forced rivals Burger King and Wendy's to more aggressively push deals and promotions as well.

At the same time, McDonald's is also trying to adjust its menu and image to better reflect shifting eating habits. In the U.S., for example, the company recently rolled out chicken wraps and the option to substitute egg whites in any of its breakfast sandwiches.

WHY IT MATTERS: With more than 34,000 locations around the world, McDonald's performance is regarded in some ways as a reflection of consumer sentiment and eating habits.

LAST YEAR'S QUARTER: The company earned $1.43 per share on revenue of $7.15 billion.

WHAT'S EXPECTED: Analysts on average expect a profit of $1.51 per share on revenue of $7.33 billion, according to FactSet.

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