Will Unit Expansion and New Product Launches Drive Sales Growth for McDonald’s Corporation (MCD)?

Burger King Worldwide is moving toward a completely franchise-based business model. The company has completed the transformation in 97% of its stores and will complete them all by the end of 2013. It also has store expansion plans, with new franchises and joint ventures in Mexico, Columbia and South Africa. It is also re-imagining its stores and has completed 20% of them. The re-imagining has helped franchise stores to achieve sales growth of around 10% to 15%, and this will be a growth driver for the company after its completion in 2015. Earlier this year, the company launched the Whooper Junior at a $1.29 price point and will be focusing more on value offerings to attract customers to the stores.

Financials

Source: Google Finance and Yahoo! Finance

McDonald’s Corporation (NYSE:MCD) has reported the highest operating margin among the three mentioned peers with 31.25%, along with the lowest one-year forward price-to-earnings ratio of 15.77. Yum! Brands has an operating margin of 29.51%, with relatively moderate forward price-to-earnings ratio of 18.86. Burger King has the lowest price-to-sales ratio of 2.9, but it also has an operating margin of 19.21%.

Conclusion

McDonald’s Corporation (NYSE:MCD) is expanding its store base around the world, but the APMEA market will have the largest store growth this year. The company looks to increase same-store sales growth through new product launches and aggressive promotions, using advances in technology to improve its efficiency. All of these initiatives are expected to drive sales growth of the company in the long term, so I recommend a “buy.”

Ash Sharma has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s.

The article Will Unit Expansion and New Product Launches Drive Sales Growth for McDonald’s? originally appeared on Fool.com and is written by Ash Sharma.

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