McDonald's Corp suffered a legal setback this week with the reinstatement of an obesity lawsuit, but financially the company is doing well.
On Friday, McDonald's reported that worldwide growth at restaurants that have been open at least 13 months, or same-store sales, was at its highest level in 17 years. Same-store sales grew 5.1 percent in the quarter.
"Financially, 2004 was an extraordinary year for us," chief executive James Skinner said.
Both fourth-quarter and 2004 profits were up sharply. Quarterly earnings more than tripled, to US$398 million, for the three months ended Dec. 31, up from US$125.7 million a year earlier.
For the year, the company had net income of US$2.28 billion, or US$1.79 a share, up 55 percent from US$1.47 billion, or US$1.15 a share, in 2003. Revenue climbed 11 percent, to US$19.1 billion, from US$17.1 billion.
The company credited the increase to the strength of the US market as well as to new menu items, remodeled stores and credit card payment options.
At the 1,100 stores that have been "reimaged," sales are 5 percent above the average, the company said. Another 1,300 stores will be remodeled this year.
McDonald's said it would add 350 restaurants this year.
Without providing specific details, McDonald's executives hinted at a possible public offering for its Chipotle Mexican Grill division. "We are exploring strategic options, including raising capital in the public markets," Skinner said.
An analyst for CIBC World Markets, John Glass, estimated that Chipotle's revenues were about US$500 million and that the company could be worth US$1 billion in a public offering.
Eager to be seen as a leader on consumer health issues, McDonald's also said it was planning to start a global program and ad campaign focused around "balanced lifestyles." Executives did not elaborate on these plans.
"They're making very visible efforts to make their products better," said Nick Hahn, managing director at Vivaldi Partners, a food industry consulting firm.
On Tuesday, a federal appeals court in New York ruled that accusations by two teenagers that McDonald's violated the New York Consumer Protection Act were worthy of "inspection."
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