USA TODAY International Edition
Gourmet menu, coffee, deals beef up McDonald’s
Americans love coffee drinks, upscale burgers and hot deals on food — and McDonald’s parlayed all three into a successful third quarter.
McDonald’s turned its McPick 2 deal — two items for $5 — drink promotions and the expanding Signature Crafted gourmet burger and chicken sandwiches menu into the drivers behind a big increase in profits compared to last year ago.
“Momentum continued to build in the third quarter ... We serve more customers more often,” CEO Steve Easterbrook said. “Our U.S. business has regained its stride.”
During a conference call with analysts, Easterbrook said McDonald’s is joining rival chains in growing its delivery business. McDonald’s currently offers delivery at 3,700 restaurants in the U.S. via Uber Eats and plans to expand to another 1,300 by the end of the year.
McDonald’s reported net income of $1.88 billion, or $2.32 a share, up 48% compared to $1.28 billion, or $1.50 per share, in the same quarter last year. The sunny report allayed fears that recent extreme weather in Texas and Florida would dampen its performance.
Sales at U.S. restaurants open at least 13 months increased 4.1%, the company reported Tuesday. Globally, sales rose 6% in the quarter ended Sept. 30.
Third-quarter revenues were down 10%, though: $5.75 billion compared to $6.42 billion in the same quarter last year. McDonald’s said that’s because it sold a chunk of its Asian business — approximately 2,800 restaurants in China and Hong Kong. As a result, the Oak Brook, Ill.-based chain can no longer count those stores’ sales as its own. Instead, it will collect licensing fees and rent. Still, McDonald’s beat expectations of $5.7 billion.
Some of the same beverage offerings touted as a reason for the chain’s strong performance this quarter are also causing headaches for individual restaurants. A new survey of franchisees by Nomura Instinet analyst Mark Kalinowski uncovered complaints about how the new handcrafted McCafe caramel macchiato, Americano and cappuccino drinks take too long to make and slow down the drive-thru.
The McCafe brand was refreshed in September.
“Some technology and menu renovation is really starting to drive results and not just in the U.S.,” said Brian Yarbrough, an equity analyst with brokerage firm Edward Jones.