Custom burgers, $1 drinks boost McDonald’s sales; shares jump
McDonald’s Corp. on Tuesday posted its biggest jump in global sales at established restaurants in five years, helped by stronger traff ic worldwide and US initiatives including drink specials and custom sandwiches. The world’s biggest fastfood chain by revenue has been working to reverse traffic declines at US restaurants, its top profit generator, with new products and services like fresh beef Quarter Pounders, signature crafted sandwiches, mobile ordering and delivery. The moves are part of a broader turnaround plan under Chief Executive Steve Easterbrook, now in its second year.
NEW YORK — McDonald’s Corp. on Tuesday posted its biggest jump in global sales at established restaurants in five years, helped by stronger traffic worldwide and US initiatives including drink specials and custom sandwiches.
The world’s biggest fastfood chain by revenue has been working to reverse traffic declines at US restaurants, its top profit generator, with new products and services like fresh beef Quarter Pounders, signature crafted sandwiches, mobile ordering and delivery.
The moves are part of a broader turnaround plan under Chief Executive Steve Easterbrook, now in its second year.
McDonald’s shares hit an alltime high and were a top gainer on the Dow Jones Industrial Average on Tuesday, and were last up 4% at $157.83.
The company appears to be winning back business lost to fastfood competitors like Wendy’s Co. and Restaurant Brands International, Inc.’s Burger King, which McDonald’s said in March had siphoned 500 million US transactions away from the chain since 2012. The two rivals report earnings in August.
“Our gain will result in pain being felt elsewhere,” Easterbrook said on a conference call to discuss the results.
McDonald’s has also focused on value for US customers by selling soft drinks of all sizes for $1 and McCafe beverages, which include frappes, smoothies and espresso drinks, for $2.
The new products and drink specials helped increase traffic and spending, with the sandwich launch persuading some lapsed customers to return and also bringing in new diners, said Neil Saunders, managing director of GlobalData Retail.
Global same- restaurant sales climbed 6.6% in the second quarter, helped by the strongest traffic in more than five years, beating the 4% growth estimated by analysts, the company said.
Sales at US restaurants open at least 13 months rose 3.9% in the second quarter, topping the 3.2% increase expected by analysts, according to research firm Consensus Metrix.
Strong sales in China lifted comparable sales gains in McDonald’s high- growth segment to 7%, almost double the 3.6% increase expected by analysts.
That contrasted with sluggish results from Yum China Holdings, Inc., the China operator of KFC and Pizza Hut that was spun off from Yum Brands, Inc.
Net income rose to $1.40 billion, or $ 1.70 per share, from $1.09 billion, or $1.25 per share, a year earlier.
Excluding items, McDonald’s earned a profit of $1.73 per share, beating the average analyst estimate of $1.62, according to Thomson Reuters I/B/E/S.
Revenue fell 3.4% to $ 6.05 billion, but topped analysts’ average estimate of $ 5.96 billion.