Upgraded stores boost McDonald’s sales

Burger giant has streamlined restaurant operations and made digital investments

McDonald’s Corp. said sales grew worldwide in its latest quarter after the burger giant made improvements at its stores and implemented new digital-ordering capabilities.

McDonald’s on Friday reported adjusted earnings per share of $2.05 for the second quarter, in line with analyst projections and up 3% from a year earlier. Revenue of $5.34 billion (U.S.) was flat compared with a year earlier. Analysts polled by FactSet expected earnings of $2.05 cents a share excluding one-time items, along with $5.3 billion in sales.

Same-store sales growth of 6.5% globally was stronger than expected and the most robust in two years. U.S. same-store sales growth of 5.7% also beat expectations for 5% growth.

McDonald’s shares rose 2.3% in premarket trading. Its stock was up 21% this year as of Thursday’s close, ahead of the S&P 500 but below an average of large restaurant stocks.

Executives credited their focus on restaurant operations, two-for $5 deals and sales of core menu items with improving sales. McDonald’s has worked to simplify its menu and operations to try to speed up service after wait times grew in recent years. Market share gains at Chick-fil-A Inc., a chicken fast-food chain with a paired down menu, have prompted McDonald’s franchisees to ask the burger chain to come up with a better chicken sandwich.

“A chicken sandwich at McDonald’s should be our top priority,” the National Owners Association, a newly formed group of operators, wrote in a recent note to fellow owners.

McDonald’s in recent years has introduced a buttermilk crispy chicken sandwich, alongside its nuggets and grilled chicken.

The company is focusing on digital sales and technology deals to provide more speed and convenience to customers. The burger chain struck a deal this month with DoorDash Inc. to deliver its food from restaurants in Houston.

McDonald’s previously had an exclusive delivery deal with Uber Technologies Inc.

The company is also testing automated kitchen equipment and voice-activated ordering in its drive-throughs, and acquired the Israeli digital startup Dynamic Yield earlier this year.

Dynamic Yield technology was in place at 700 U.S. McDonald’s stores during the most recent quarter.

The chain has also pushed franchisees to upgrade their stores with new dining rooms and digital kiosks.

McDonald’s expects to open around 1,200 restaurants in its current fiscal year. It projects commodity costs to grow 2% to 3% in the U.S. and by 2.5% in its five biggest international markets.