McDonald’s Corp beat quarterly comparable sales and profit estimates, aided by higher menu prices and increased restaurant traffic from inflation-weary customers seeking value meals.
The stock increased 3.5% to $265.69.
McDonald’s, like other fast-food restaurants, raised the prices of its burgers and fries to keep up with rising commodity and labor costs. Its menu prices in the United States increased by more than 10% year on year in the third quarter ended September 30.
Despite this, customers continue to flock to the chain from more expensive restaurants in Europe and the United States.
“We’re gaining share right now among low-income consumers” in the United States, Chief Financial Officer Ian Borden said during a call with investors. “That goes back to the fact that we are positioned as the leading brand in terms of value for money and affordability.”
According to Placer.ai, a location analytics firm, visits to the Chicago-based chain’s U.S. restaurants increased 6.2% in September, outpacing traffic to the broader quick-service restaurant space, which increased 0.8%.
According to IBES data from Refinitiv, McDonald’s global same-store sales increased 9.5% in the third quarter, compared to expectations for a 5.8% increase.
During the call, CEO Chris Kempczinski stated that he expects a mild to moderate recession in the United States and one that is “a little deeper and longer in Europe.”
Unlike during the previous recession, when McDonald’s relied on its dollar menu to retain low-income customers, the chain plans to weather the expected economic downturn through digital orders and delivery, according to Borden.
Comparable sales in the company’s largest market, the United States, increased 6.1% in the third quarter, aided by higher prices.
However, due to the impact of a stronger US dollar, McDonald’s total revenue fell 5% to $5.87 billion, beating estimates of $5.69 billion.
McDonald’s net income dropped 8% year on year to $1.98 billion, or $2.68 per share.
Kempczinski said the company’s Cactus Plant Flea Market promotion – its “Happy Meal” for adults – ran in early October and resulted in the highest weekly U.S. digital transactions ever. Comparable sales percentage gains in the United States are expected to be in the low double digits in October.
McDonald’s profit per share was $2.68, beating estimates of $2.58 but remaining 6% lower than the same quarter last year.
(Adapted from BusinessToday.in)
Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability
Leave a Reply