National Post (National Edition)
McDonald’s shows signs of a turnaround
NEW YOR K • McDonald’s sales edged up at established U.S. locations during the third quarter, snapping a streak of about two years of quarterly declines.
The world’s largest burger chain also said sales rose 4 per cent on a global basis at established locations. In the U.S., the figure rose 0.9 per cent. The last time the figure rose in the U.S. was for the third quarter of 2013.
The company also said it expects the sales figure to rise globally for the final three months of the year, including in the U.S.
Its shares jumped sharply and struck an all-time high in early trading.
McDonald’s attributed the U.S. sales uptick in the period to improved service and menu changes as it works on reversing declining customer visits. Tweaks to food preparation included toasting buns longer and searing burgers to make them juicier. For its Egg McMuffins, the company switched back to butter and regular English muffins, instead of margarine and whole grain muffins.
A new buttermilk chicken sandwich, which is positioned as a premium offering, is supposed to boost perceptions about food quality — and fetch a little more money. The company has also been simplifying its menu to speed up service and improve order accuracy.
“Customers are noticing the differences,” said CEO Steve Easterbrook, who took the helm in March.
In hopes of sparking a turnaround, Easterbrook is presiding over bigger changes too. Earlier this month, the
Customers are noticing the differences
company introduced “all-day breakfast” in the U.S., meaning people can get an Egg McMuffin whenever the craving strikes.
Easterbrook was reluctant to give details on the early performance for all-day breakfast. But in his trips around the country, he said it seemed to be “cultish” among students.
Other changes are in store, too. McDonald’s is evaluating options to replace its Dollar Menu, which the company moved away from it amid rising costs for ingredients like beef. The company said it is working with franchisees to determine a new national value strategy.
McDonald’s needs to make up lost ground. In the year ago period, sales declined 3.3 per cent at established U.S. locations as customer visits dropped. Despite the sales bump and encouraging signs in the U.S., Easterbrook said Thursday that getting guest counts back up would be a “top priority.”
Easterbrook has repeatedly said he wants to transform McDonald’s into a “modern, progressive burger company.” That has included a pay bump for workers at companyowned locations amid protests calling on McDonald’s and others to give fast-food workers $15 an hour.
McDonald’s said its operating income dipped during the quarter as a result of its pay hike and other benefits, but that the move would pay off with better service.
For 2015, the company is expected to reduce its store count in the U.S. for the first time since at least 1970, according to an Associated Press review of regulatory filings. The company has more than 36,000 locations around the world.
For the three months ended Sept. 30, the company said Australia and the United Kingdom delivered a strong performance. In China, where it was hit with supplier problems, McDonald’s said its sales performance was “very strong.”
For the quarter, it earned $1.31 billion, or $1.40 per share, topping the $1.27 per share analysts expected.
Revenue was $6.62 billion, also above the $6.41 Wall Street expected, according to FactSet.
Shares jumped nearly 8 per cent to $110.34 in afternoon trading.