McDonald's leans on price hikes to beat earnings estimates
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
MCDONALD'S beat estimates for quarterly sales and profit on Thursday (Apr 28) as the world's largest fast-food chain benefited from price increases in the United States and the launch of a new loyalty programme.
Shares of the burger chain rose about 2.6 per cent to US$253.49 in premarket trading.
Rising wages due to a tight labour market and soaring costs of ingredients such as chicken and beef have forced US restaurant chains to announce a series of price hikes, which have seen little resistance from consumers so far.
McDonald's investments in delivery services, digital restaurant kiosks and drive-thru lanes have also given it an edge over smaller fast-food chains, which have been forced to cut down on operating hours due to staff shortages.
The introduction of a loyalty programme late last year, letting subscribers on McDonald's app earn points they can redeem on burgers and fries, has also helped drive a 3.5 per cent increase in first-quarter comparable sales in the United States, its biggest market.
Analysts expected an increase of 3.3 per cent, according to Refinitiv IBES.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Global comparable sales rose 11.8 per cent, beating estimates of an 8.2 per cent increase, boosted by the easing of Covid-19 restrictions in some overseas markets.
McDonald's said it incurred US$100 million in costs in the first quarter related to the likely disposal of inventory due the company's decision to temporarily suspend operations in Russia and Ukraine.
McDonald's, one of the first major Western brands to enter Russia after the fall of the Soviet Union, previously said the closure of restaurants in the region would cost US$50 million a month, including lost revenue and wages payments.
Total revenue increased 11 per cent to US$5.67 billion, beating expectations of US$5.59 billion.
Excluding costs to support the company's business in Russia and Ukraine as well as other one-time expenses, McDonald's earned a profit of US$2.28 per share, besting estimates of US$2.17. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
