Breakfast boosts McDonald’s sales
McDonald’s said U.S. sales jumped in the first quarter as it raised prices, worked on improving service and benefited from the popularity of its all-day breakfast menu.
Sales rose 5.4 percent at established U.S. locations, marking the third straight quarter the figure has climbed.
As part of its push to stage a comeback, McDonald’s CEO Steve Easterbrook said the company is sparing no detail in looking at ways to step up operations. He noted the company is even increasing the font size on receipts for special requests to ensure the orders are accurate.
The most notable change, however, has been the company’s launch of an all-day breakfast menu in the U.S. last fall. The company also introduced a “McPick 2” value deal this year to draw the price-conscious customers it had lost after abandoning the Dollar Menu.
The shake-up in its flagship U.S. market comes after McDonald’s conceded that it failed to keep up with changing tastes, and saw customer visits decline.
Still, the chain is under pressure from intensifying competition. Burger King, Wendy’s and Taco Bell are introducing new menu items and deals, while Subway is going back to playing up the freshness of its sandwiches.
McDonald’s also did not provide details on how much of its sales increase came from higher spending, versus an uptick in customer visits. The latter measure is considered a key indicator of a restaurant chain’s health.
Easterbrook said only that customer visits were “positive,” but that he’d “like to see greater strength there.”
The company, based in Oak Brook, Illinois, said it lifted pricing by more than 3 percent in the U.S during the quarter.
The company’s results also benefited from the closure of underperforming stores. That means those stores no longer drag down sales at established locations, a closely watched gauge. The figure measures only sales at stores open at least 13 months to strip out the impact of store openings and closings.
The shuttering of underperforming locations also means McDonald’s domestic store base of more than 14,200 locations is set to shrink for the second straight year, following decades of expansion.
For the quarter, McDonald’s said global sales rose 6.2 percent at established locations. The International Lead unit, which includes established markets such as the U.K. and Australia, saw growth of 5.2 percent.
The High Growth unit, which includes China, saw sales increase 3.6 percent.
Profit rose to $1.1 billion, or $1.23 per share. That’s 7 cents better than analysts had expected for per-share earnings.
Revenue was $5.9 billion, also topping Wall Street expectations.
McDonald’s CEO Steve Easterbrook said the company is sparing no detail in looking at ways to step up operations.