June 19, 2024

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McDonald’s beat earnings estimates, boosted by higher menu prices

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McDonald’s (MCD) beat earnings estimates for the third quarter as higher menu prices boosted sales growth.

Global systemwide sales — which include sales at company-owned and franchised restaurants — increased 11%. Same-store sales jumped 8.8%, higher than analysts’ estimates of 7.79%, per Bloomberg consensus data.

Revenue jumped 14% year-over-year to $6.69 billion, higher than estimates of $6.52 billion. Adjusted earnings per share came in at 3.19, up 19% from last year.

“The macroeconomic environment is unfolding in line with our expectations for the year, and we continued to deliver convenience and value for our customers,” CEO and President Chris Kempczinski said in a press release.

Shares of McDonald’s are down nearly 3% year-to-date, trailing behind Restaurant Brands International (QSR), which is up nearly 2% year-to-date, but ahead of YUM! Brands (YUM) shares, which are down nearly 7%.

As consumers buckled down on where they spent their money, McDonald’s said it got a boost in its home country.

In the US, sales benefitted from higher menu prices, new marketing campaigns, and growing digital and delivery orders. Beginning in August, the company launched its As Featured In Meal campaign that showed meals that have appeared in films, movies or TV shoes.

Low-income consumers in the US, who make $45,000 and under, contributed to a “slight dip in traffic” compared to a year ago in Q3, Kempczinski said on a call with investors. However, the company continues to gain share among middle and high-income consumers.

Baird analyst David Tarantino said McDonald’s typically gains foot traffic when there are “mounting macroeconomic uncertainties” in a note to clients, adding that the Golden Arches is “one of the best positioned brands…to navigate a tougher backdrop.”

During the financial crisis from 2008 to 2009, sales growth averaged 3.4% in the U.S. and 6.9% in Europe, he said.

The company also reported systemwide digital sales — which includes sales…

2023-10-30 10:27:12

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