McDonald’s beats sales estimates as cheaper menu, new launches drive demand
2023.10.30 08:00
© Reuters. FILE PHOTO: McDonald’s Golden Arches are seen next to a Starbucks at the Union Square location in New York January 29, 2015. REUTERS/Brendan McDermid/File Photo
By Deborah Mary Sophia
(Reuters) -McDonald’s beat Wall Street estimates for third-quarter profit and sales on Monday, powered by new launches as well as steady demand for its cheaper burgers and fries from diners struggling with still-high food prices.
Shares of the company, which also raised its quarterly cash dividend by 10%, rose about 2% in premarket trading.
The burger giant has been able to keep its meals relatively more affordable following the industry-wide hike in prices last year, helping counter the trend of inflation-hit consumers opting to eat more at home and a decline in footfall.
Global comparable sales at McDonald’s (NYSE:) jumped 8.8% in the quarter ended Sept. 30, while analysts on average expected a 7.36% rise, according to LSEG data.
Drawing on its history of menu enhancements, McDonald’s launched the Cheesy Jalapeno Bacon quarter pounder in July and brought back the fan-favorite Spicy Chicken McNuggets to menus in September.
Both items likely drove solid sales growth in the third quarter, UBS analysts had noted.
While overall dining traffic fell in all three months of the quarter, McDonald’s saw a 7.3% jump in July, data from Placer.ai showed.
Footfall strength at McDonald’s tapered off in the next two months – recording declines of 1.1% and 3.7% – but remained ahead of the broader industry trends.
Total restaurant margins increased 12% to $3.84 billion in dollar terms as prices of proteins and vegetables trended lower, despite an uptick in other expenses.
The company lifted full-year margin expectations to 46% from 45% previously.
U.S. comparable sales climbed 8.1% in the quarter, beating estimates of a 7.4% increase, thanks also to higher average spending at stores.
Meanwhile, same-store sales in McDonald’s international operated markets increased 8.3%, edging past expectations for 8.03% growth.
Total quarterly revenue increased 14% to $6.69 billion. Adjusted per-share profit of $3.19 beat estimates of $3.00.
