Dol­lar drinks

Cheap so­das help boost McDon­ald’s sales in U.S.

The Guardian (Charlottetown) - - BUSINESS -

McDon­ald’s says a pro­mo­tion for $1 so­das and a new line of pre­mium burg­ers helped boost sales in its flag­ship U.S. mar­ket.

The com­pany said Tues­day that do­mes­tic sales rose 3.9 per cent at es­tab­lished lo­ca­tions dur­ing the sec­ond quar­ter. Glob­ally, it says sales rose 6.6 per cent.

CEO Steve Easter­brook has been work­ing on mod­ern­iz­ing the chain’s menu and stores to get cus­tomers vis­it­ing more of­ten in an in­creas­ingly com­pet­i­tive en­vi­ron­ment.

The fre­quency of cus­tomer vis­its at es­tab­lished U.S. lo­ca­tions has de­clined for four years in a row. Against that back­drop, the chain is set to shrink its num­ber of do­mes­tic lo­ca­tions for the third year in a row.

Easter­brook has said McDon­ald’s needs to adapt to chang­ing ex­pec­ta­tions around con­ve­nience to get peo­ple vis­it­ing its ex­ist­ing restau­rants more of­ten.

The ef­forts in the U.S. in­clude in­tro­duc­ing in-store or­der­ing kiosks, ex­pand­ing de­liv­ery in part­ner­ship with UberEats, and launch­ing a mo­bile or­der-and­pay op­tion later this year.

While those plans may boost sales over the long term, the com­pany is re­ly­ing on pro­mo­tions like the bev­er­age deals that in­clude $2 McCafe drinks and new “Sig­na­ture Crafted” burg­ers to at­tract cus­tomers in the short term. That helped boost cus­tomer vis­its at ex­ist­ing U.S. restau­rants dur­ing the quar­ter, though it had about 100 fewer lo­ca­tions than a year ago.

Chris Kem­pczin­ski, pres­i­dent of McDon­ald’s USA, said in an in­ter­view last month that about three quar­ters of the peo­ple who come in for those drink deals also end up buy­ing food.

“The typ­i­cal be­hav­iour is that they will buy other items,” he said. McDon­ald’s is also look­ing be­yond its core menu and of­fer­ing pas­tries by the counter in some lo­ca­tions, and test­ing “dessert sta­tions” be­hind the counter that would let em­ploy­ees make an ex­panded menu of desserts.

In the mean­time, the U.S. store count is con­tin­u­ing to shrink. The Oak Brook, Illi­nois­based com­pany had 14,079 do­mes­tic lo­ca­tions at the end of the quar­ter, down about 100 stores from a year ago. Glob­ally, it ex­panded and had more than 37,000 lo­ca­tions.

For the pe­riod ended June 30, the com­pany earned $1.4 bil­lion, or $1.70 per share.

Earn­ings ad­justed for non-re­cur­ring costs came to $1.73 per share, beat­ing an­a­lysts fore­cast for $1.62, ac­cord­ing to a poll by Zacks In­vest­ment Re­search.


This April 24 file photo shows a McDon­ald’s restau­rant in down­town Pitts­burgh. McDon­ald’s Corp. re­ported earn­ings Tues­day that rose 6.6 per cent glob­ally over the pre­vi­ous quar­ter.

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