McDonald’s tops sales estimates despite price rises
McDonald’s Corp reported firstquarter sales and profit that outpaced analysts’ projections, a renewed sign that the burger chain is picking up customers amid stubborn inflation and higher menu prices.
The key metric of comparable sales rose nearly 13% above the average estimate of 8.2% compiled by Bloomberg. US results also handily topped projections by that measure, with the company adding that comparable guest counts rose. Earnings in the quarter, excluding some items, were $2.63 a share, also beating estimates.
“Amidst a challenging operating environment, customer demand for McDonald’s brand remains strong,” CEO Chris Kempczinski said in the statement accompanying the results.
The shares rose 1% in early trading in New York. The stock has gained 11% in 2023 through Monday’s close, outpacing the advance off the S&P 500 index.
The company’s results show the resilience of the McDonald’s business — and US diners — in the face of relentless inflation for basic goods including food.
McDonald’s said it benefited from “strategic menu price increases” in the US as well as growth in digital sales and delivery.
The Big Mac seller is viewed as a value offering during economic uncertainty, when consumers tend to trade down from higher-price peers.
Same-store sales topped estimates in all geographic segments, with strong results from Japan, Australia, Canada, France, Germany and the UK.
The company gets more than half of its revenue from international markets.
The chain said restructuring costs hurt earnings by 18c a share, or $180m.
In a bid to reduce costs and speed up decision-making, the company earlier in 2023 announced a restructuring that includes the layoff of hundreds of employees. McDonald’s has also cut the pay of some corporate staff.
Kempczinski said the results showed the company’s strategy was paying off, adding that the company was seeing “significant customer-satisfaction improvement around the world”.