McDonald’s reported better-than-expected earnings on Wednesday — as the fast-food chain’s push into value meals and promotional tie-up attracted budget-conscious diners amid economic uncertainty.
The Chicago-based company said same-store sales increased 3.8% in the second quarter — the biggest jump in nearly two years and easily topping estimates of a 2.4% rise by LSEG analysts.
McDonald’s — which found success last year by offering $5 meal deals and the buy-one, add-one for $1 offer — launched a limited-time Happy Meal for kids and adults tied to the “Minecraft” Movie promotion in April. In May, it introduced McCrispy Chicken Strips as a permanent menu item.
The moves helped the company “re-engage with critical” low-income diners, as they typically visit the Big Mac chain more frequently than middle- and high-income groups, according to McDonald’s CEO Chris Kempczinski.
“This bifurcated consumer base is why we remain cautious about the overall near-term health of the US consumer,” he said Wednesday during an earnings call.
McDonald’s outperformed the rest of the industry in the second quarter with visits jumping 0.8%, above a 0.7% dip in the overall quick-service restaurant sector, according to data from Placer.ai, which tracks foot traffic at retail locations.
“While rivals like Yum Brands and Chipotle struggled with consumer pullback, McDonald’s played to its strengths by leaning into value, nostalgia and limited-time promotions,” eMarketer analyst Zak Stambor said.
Same-store sales in the US – which is McDonald’s largest market – rose 2.5%, above a 0.7% decline in the same period last year.
It represented a massive rebound from a steep 3.6% drop last quarter, which was the worst decline since 2020.
McDonald’s performed even better outside the US, with its international developmental licensed markets division – which includes Japan and China – reporting same-store sales growth of 5.6%.
Same-store sales in its international operated markets segment – which includes the UK, Australia and Canada – rose 4%.
Earnings per share jumped 7% from the year before to $3.19 in the second quarter, beating Wall Street estimates of $3.15.
McDonald’s reported revenue of $6.84 billion, above projections of $6.7 billion.
Executives said McDonald’s results will likely be even stronger in the second half of the year, especially since the fourth quarter will probably far outperform compared to last year – when a widespread E. coli outbreak throttled demand.
Credit: Source link
