McDonald's beats sales estimates as cheaper items draw consumers
MCDONALD’S beat market expectations for quarterly comparable sales on Thursday (Jul 27), as the restaurant chain’s relatively cheaper burgers and fries attracted cost-conscious diners in an inflationary environment.
The company’s shares rose nearly 2 per cent to US$297.09 in premarket trading.
While US restaurant chains including McDonald’s have had to raise prices to offset a hit to profit from higher costs, the company has still managed to keep its prices lower than its competitors.
The chain also tried to attract more diners to its more than 13,000 outlets in the US with promotional deals such as the Grimace Birthday Meal, a popular limited-time launch featuring purple milkshakes, created in honour of the Grimace character in McDonald’s ads.
Those moves, coupled with improved staffing levels at its chains, have helped McDonald’s gain market share from its peers.
Placer.ai data showed traffic at the restaurant’s US locations jumped 8.4 per cent in the second quarter. In contrast, overall traffic at fast-food and quick-service chains climbed just 1.2 per cent in the same period.
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McDonald’s said its global comparable sales jumped 11.7 per cent in the second quarter, handily beating analysts’ average estimate of an 8.88 per cent increase, according to Refinitiv IBES data.
Easing costs of key ingredients including chicken, cheese and pork have also helped McDonald’s, whose net income nearly doubled to US$2.31 billion in the three months ended June 30.
Comparable sales for McDonald’s in the US climbed 10.3 per cent in the quarter, compared with the estimates of an 8.6 per cent rise, while those in its internationally operated markets rose 11.9 per cent, beating expectations for an 8.2 per cent growth.
Excluding items, McDonald’s earned US$3.17 per share. Analysts on average were expecting a profit of US$2.79 per share. REUTERS
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