McDonald’s beats sales estimates on boost from pricier menu

MCDONALD’S beat quarterly comparable sales estimates on Thursday (Oct 27), helped by higher menu prices and an increase in restaurant traffic from inflation-weary customers looking for value meals.

The company’s shares rose 2.2 per cent to US$262.30 in premarket trading.

Like other fast-food chains, McDonald’s has been forced to raise prices of its burgers and fries to keep up with surging commodity costs, but its meals are still cheaper than eating out at dine-in restaurants keeping demand resilient even as consumer spending power gets crimped.

Visits to the burger chain’s US restaurants increased 6.2 per cent in September, outpacing traffic to the broader quick-service restaurant space which showed just a 0.8 per cent increase, according to data from Placer.ai, a location analytics firm.

Chipotle Mexican Grill on Tuesday also beat quarterly sales and profit estimates as it passed on higher prices to customers.

McDonald’s global same-store sales increased 9.5 per cent in the third quarter ended Sep 30, compared with estimates for a 5.8 per cent rise, according to IBES data from Refinitiv.

Comparable sales for McDonald’s in the United States, the company’s biggest market, rose 6.1 per cent in the reported quarter helped by higher prices.

McDonald’s iconic Big Mac burger was selling for US$5.15 in June, up from US$4.93 a year earlier, according to the Economist magazine’s widely used index of prices.

Analysts have noted that an easing in gas prices also boosted third-quarter restaurant sales in the United States in general after a slowdown in June.

However, McDonald’s total revenue fell 5 per cent to US$5.87 billion in the reported quarter, due to the impact of a stronger US dollar. That still beat estimates of US$5.69 billion.

The company’s net income fell 8 per cent to US$1.98 billion, or US$2.68 per share. REUTERS