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