McDonald’s traffic up again, solidifying turnaround

New CEO’s menu tweaks credited with reversing sales slump

McDonald’s is finally getting customers back into restaurants, a key milestone for a company that suffered years of declines.

The world’s largest restaurant chain posted another increase in U.S. diners last quarter — the second-straight period that the measurement was positive. Same-store sales, another closely watched benchmark, also topped analysts’ estimates.

The results suggest that chief executive officer Steve Easterbrook is making progress with his turnaround plan, which he launched after taking the helm in March 2015 amid a prolonged sales slump. The question now for investors is how much further can the rally go: McDonald’s shares were already up 34 per cent this year heading into the third-quarter report.

“Trees don’t grow to the sky,” said Michael Halen, an analyst at Bloomberg Intelligence.

McDonald’s domestic same-store sales gained 4.1 per cent in the third-quarter, compared with an average estimate of 3.4 per cent. Globally, the measure gained six per cent, which also topped estimates.

Easterbrook, 50, has built his comeback on a revamped menu — including cheaper drinks, premium burgers and all-day breakfast in the U.S. — along with a push to franchise more of its restaurants globally.

The customer-traffic recovery is a pivotal moment for the Oak Brook, Ill.-based chain. Company executives had said that McDonald’s lost more than 500 million transactions in its home market since 2012. Most of those customers defected to other traditional fastfood competitors, not fancier or fast-casual chains such as Chipotle Mexican Grill and Panera Bread, according to company officials.

The company’s recovery has been largely fuelled by its established markets, rather than emerging economies.

McDonald’s is getting more of its revenue from the U.S. and so-called lead international countries than at any point in years.