ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, October 19, 1996 TAG: 9610210038
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: CHICAGO
SOURCE: Associated Press
The more than $100 million McDonald's Corp. spent to introduce the Arch Deluxe cheeseburger hasn't stopped a slide in its U.S. restaurant business.
The company reported Friday that its third-quarter profits rose 10 percent but that its U.S. operations performed sluggishly for the sixth consecutive quarter.
With sales at competitor Wendy's continuing to improve despite a general slowdown in the American quick-service restaurant industry, McDonald's has a tough road ahead, analysts said.
``You have to scratch your head when the Arch Deluxe was launched with the biggest marketing pushes ever done and their sales fall while one of their competitors is sailing along,'' said analyst Michael Kennedy at American Express Financial Corp. in Minneapolis. ``It would suggest that these products are not hitting their stated objectives.''
McDonald's chairman and chief executive admitted that company executives are disappointed with domestic results, although he didn't specifically mention the Deluxe line.
``Our U.S. restaurants are operating in a complex, dynamic and difficult marketplace, and recent operating performance has fallen short of our goals,'' Michael Quinlan said. ``Yet we are very optimistic about our long-term opportunities to grow in the domestic marketplace.''
Earlier this year, McDonald's introduced the Arch Deluxe, and three weeks ago added the Crispy Chicken Deluxe, Grilled Chicken Deluxe and Fish Filet Deluxe.
But many analysts have said the Deluxe line will do little to reduce the fast-food leader's domestic sales slide.
``Any good restaurateur is going to add new menu items just to maintain sales,'' Kennedy said.
Company spokesman Chuck Ebeling again said the line is exceeding expectations. But he added, ``Those products alone don't totally change the momentum of our U.S. business.''
LENGTH: Short : 46 linesby CNB