Europeans must want to eat a lot of fatty food and get heavy like many Americans are. McDonald’s (MCD) will probably pick up a big chunk of its Q2 earnings out of the EU.
So much for the citizens on the continent loving good cuisine.
According to Bloomberg, "McDonald’s Corp., the world’s largest restaurant company, may report a second-quarter profit after European sales rose twice as fast as in the U.S."
McDonald’s is clearly the exception to the rule that American businesses can only do well if they are growing fast in Asia and Latin America. Heart-healthy fare may still be the choice of the rest of the world. Europe may be McDonald’s best and brightest hope.
European sales do have a drawback. Even if fast food is cheap, a recession can hurt even the most modest expenditures. McDonald’s margins are being attacked by rising food costs. The volume of its sales will become more critical to earnings are gross profits tumble.
And, Europe is not a lock to avoid a sharp and distressful period of economic contraction.
Douglas A. McIntyre
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