Breakfast Biscuits Push McDonald's Profit Increase

U.S. consumers gobbling up breakfast biscuits and chicken sandwiches helped push McDonald's Corp. back to profitability in the second quarter despite the economic slowdown.

But the nation's No. 1 hamburger chain also warned Wednesday that it expects beef and chicken costs to rise substantially in the United States and Europe through the rest of this year, and is testing several options that may change the makeup of its popular dollar menu.

"The way the dollar menu looks today won't be the way it's going to look next year," said McDonald's President and Chief Operating Officer Ralph Alvarez on a conference call with investors. "In this current environment, we've got to make sure we're pricing smart, not just pricing low."

McDonald's earned 1.19 billion U.S. dollars in the second quarter, including a gain from the sale of its stake in sandwich chain Pret A Manger, solidly besting Wall Street estimates. A year earlier, the company posted a loss of 711.7 million dollars stemming from charges on the sale of its Latin America and Caribbean businesses.

The Oak Brook, Ill.-based company said revenue rose 4 percent to 6.08 billion dollars, also beating analysts’predictions.

McDonald's specifically credited its breakfast items, new chicken offerings and beverages with the sales increases. The chain introduced a new chicken biscuit sandwich for breakfast, a chicken sandwich for lunch and espresso-based coffee drinks in some locations.

McDonald’s also said it expects beef costs to rise between 8 percent and 9 percent in the United States and Europe and chicken costs to jump between 5 percent and 6 percent in the United States and between 7 percent and 8 percent in Europe.