Discounts lure more to McDonald’s U.S. stores

Cheap soda and burgers brought more people into McDonald’s.

The fast-food company said Tuesday that sales in the U.S. rose 4.1 per cent at existing locations during the third quarter, thanks to US$1 soft drinks, coupons on its app and a two-for-US$5 promotion called McPick 2. And with more people coming in, McDonald’s said some also bought pricier burgers stuffed with crispy onions, kale or guacamole, which helped sales.

“We are serving more customers, more often,” said CEO Steve Easterbrook.

McDonald’s has been offering deals to fight off competition from other low-priced chains. It said Tuesday it plans to offer more cheap eats next year, with items priced at US$1, US$2 and US$3.

Bill Fahy, an analyst at Moody’s, said the boost in sales is “a good indication that the company’s various initiatives are resonating well with consumers.”

McDonald’s has also been tinkering with its menu as more people shun processed foods. It removed artificial preservatives from its nuggets and it plans to use fresh beef in Quarter Pounder burgers next year. And it has been modernizing its restaurants by adding mobile ordering and offering delivery through the UberEats app. About 5,000 of its nearly 14,000 U.S. locations will have delivery by year’s end.

The company’s McCafe drinks “performed well,” said Chris Kempczinski, who oversees McDonald’s U.S. business, but he didn’t provide any numbers. The company rolled out espresso drinks, such as cappuccino and caramel macchiato, during the quarter and plans to remodel McCafes in its restaurants next year.

“McCafe can be a significant growth platform for us in the future,” Kempczinski said.

Worldwide, McDonald’s sales rose six per cent at existing restaurants, the Oak Brook, Ill.-based company said.

Overall, McDonald’s reported net income of US$1.88 billion, or US$2.32 per share, in the three months ended Sept. 30. That’s up from US$1.28 billion, or US$1.50 per share, in the same period a year ago. Adjusted earnings came to US$1.76 per share, a penny above what analysts expected, according to Zacks Investment Research.

Revenue fell 10 per cent to US$5.75 billion, missing analyst expectations of US$5.8 billion. The company said it brought in less revenue as it switched more stores from company-owned restaurants to ones owned by franchisees, especially in China and Hong Kong.