McDonald's hungry for overseas success

October 13, 2012 

An army travels on its stomach. It's the way to a man's heart. And what we eat tells us something about our economic appetites.

On Friday, McDonald's reports its third-quarter profits. It probably was a lukewarm summer at the Golden Arches. A cooling economy in the U.S. will do that. So will the sour economy in Europe.

There are more than 7,000 McDonald's locations in Europe. It is as important as the U.S. is to its bottom line. The bulk of those European restaurants are in Germany and France, the drivers of the continent's economy.

When the global markets seized up four years ago, plenty of people filled their stomachs with items off McDonald's value menu. McDonald's focused on its menu, offering healthier fare while keeping its standards competitively priced. Big profits followed as the economy improved and diners remained frugal.

In July, sales growth at European McDonald's restaurants open at least a year saw its worst performance in almost a decade.

Coupons and meal deals helped improve sales a little in August, but the wariness of European eaters in the face of government belt-tightening is expected to weigh on McDonald's earnings.

Low prices and promotions only go so far. They can't stimulate an appetite that has gorged on debt and now must make do on less.

Tom Hudson, anchor and managing editor of "Nightly Business Report," can be followed on Twitter HudsonNBR.

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