July 23 (Bloomberg) -- McDonald’s Corp., the world’s largest restaurant company, dropped the most in nine months in New York Stock Exchange trading after second-quarter revenue declined more than analysts projected.

McDonald’s fell $2.73, or 4.6 percent, to $56.09 at 4 p.m. in composite trading. The shares had the biggest decline since Oct. 15 after losing 5.4 percent this year before today.

Slowing consumer spending and a stronger U.S. dollar contributed to a 7 percent drop in revenue, to $5.65 billion, the company said today in a statement. Global sales at established stores rose 4.8 percent, less than analysts’ projected, as visits declined in countries including China.

“Mid-single-digit comparable sales are going to look pretty good to any other restaurant company, but for McDonald’s it doesn’t look that great,” said Larry Miller, an analyst with RBC Capital in Atlanta. “Investor expectations are higher for these guys.” He rates the stock “sector perform.”

Analysts predicted revenue of $5.69 billion, the average of estimates compiled by Bloomberg.

Net income declined to $1.09 billion, or 98 cents a share, from $1.19 billion, or $1.04, a year earlier, when the Oak Brook, Illinois-based company recorded a 10-cent gain from an asset sale. Excluding a 1 cent gain from the sale of Redbox Automated Retail LLC, the video-rental service, profit met the 97-cent average projected by analysts.

Foreign Exchange

Currency translation trimmed profit 9 cents a share in the quarter, the company said. McDonald’s now expects foreign exchange to cut full-year earnings by 21 cents a share, and forecast it will reduce third-quarter profit by 6 cents, Chief Financial Officer Peter Bensen said.

The Dollar Index, which the ICE futures exchanges uses to track the dollar against the currencies of six major U.S. trading partners, including the euro, British pound and yen, rose more than 10 percent in the 12 months through June.

Sales of McCafe coffee drinks in the U.S. are topping company expectations since national advertising began in May, Chief Operating Officer Ralph Alvarez said today on a conference call. The espresso-based drinks have helped increase the coffee business to 5 percent of McDonald’s sales, he said. They compete with Starbucks Corp.’s more expensive cappuccinos and lattes.

European Sales

McDonald’s worldwide comparable-store sales rose 3.5 percent in the U.S., 6.9 percent in Europe and 4.4 percent in the Asia-Pacific, Middle East and Africa region. The sales missed estimates as customers spent less in countries including Germany, Russia, Spain and China.

“We are disappointed with European sales, however, like everybody, we are feeling the crisis,” Jerome Tafani, chief financial officer for McDonald’s Europe, said in an interview today. “In June, visits were a little higher but in some markets we have seen some decrease in the average check.”

Global sales at McDonald’s restaurants open at least 13 months were projected to grow 5.6 percent, the average of estimates from analysts at Robert W. Baird & Co., Barclays Capital and Jefferies & Co.

Baird’s David Tarantino expected sales growth of 3.8 percent in the U.S., 7.5 percent in Europe and 5.3 percent in Asia, the Middle East and Africa. Jeffrey Bernstein of Barclays projected gains of 3.6 percent in the U.S., 7.7 percent in Europe and 5.3 percent in Asia, the Middle East and Africa.

Traffic at U.S. fast-food chains fell 2 percent in the quarter, according to retail consulting group NPD.

“We’re seeing consumers trade out of even the quick- service restaurants” to prepare more food at home, said Tom Forte, an analyst with Telsey Advisory Group in New York. He has a price target of $67 to $69 on the stock. “It’s becoming a battle for market share, and McDonald’s can win, but we’re concerned about the sales trends.”

To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.

Last Updated: July 23, 2009 16:16 EDT