McDonald's Reports Strong Third Quarter

McDonald’s Reports Strong Third Quarter

On Thursday, McDonald’s said that increased restaurant visitation in the United States enabled it to beat analysts’ projections for its quarterly earnings and revenue. The business defines a pattern other chains have observed, which has experienced declining traffic following price increases on the menu.

Although many restaurants, including McDonald’s and its franchisees, have increased prices to offset rising food and labour expenses, consumers weary of inflation have been limiting their dining out to save money.

During the company’s earnings call, McDonald’s officials were candid about the difficulties the company’s restaurants are experiencing. According to CEO Chris Kempczinski, the economic landscape is becoming more unstable and unsettling. CFO Ian Borden told analysts that consumers and the restaurant business are under “severe pressure” due to inflationary pressures and interest rate increases.

McDonald's Reports Strong Third Quarter (1)

The company’s shares increased by more than 3% as of Thursday’s closure. According to a Refinitiv survey of analysts, the following discrepancy exists between what the firm reported and what Wall Street was anticipating:

  • $2.68 per share in earnings versus the $2.58 projected
  • Revenue: $5.87 billion versus the anticipated $5.69 billion

The company’s net income for the third quarter fell from $2.15 billion ($2.86 per share) to $1.98 billion ($2.68 per share). To $5.87 billion, net sales decreased by 5%. When Tooj out foreign exchange effects were, McDonald’s income increased by 2% in the period. The company’s same-store sales increased globally by 9.5%, exceeding StreetAccount’s prediction of a rise of 5.8%. All three McDonald’s divisions surpassed Wall Street’s forecasts for same-store sales growth.

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Same-store sales in McDonald’s domestic market rose 6.1%. Credit Price increases and increased client traffic brought on by marketing initiatives were to the corporation. U.S. menu prices increased 10% in the third quarter compared to last year’s period. According to executives, all dayparts are doing well, while breakfast and dinner are doing significantly better than lunch. The chain anticipates U.S. same-store sales growth in the low double digits for October.

As inflation puts pressure on their wallets, some of McDonald’s lower-income customers have been scared away and aren’t going as regularly or are switching to less expensive menu choices. However, McDonald’s is also attracting more consumers with better incomes who prefer fast meals over full-service restaurants.

McDonald’s claimed significantly more significant same-store sales growth outside the United States. Same-store sales increased by 8.5% in the third quarter in the markets where the firm operates its restaurants. Germany, France, Australia, and the United Kingdom are included in that section.

Because of the value we provide, Kempczinski said, “even while U.K. customers struggle with the cost of living and energy implications, our customers are returning to McDonald’s.” According to executives, the network may provide financial assistance to European franchisees battling inflation, similar to the service it provided during Covid lockdowns.

Same-store sales increased 16.7% in nations where licensees run McDonald’s restaurants, driven mainly by robust growth in Brazil and Japan. However, due to regional lockdowns that delayed its recovery, China continued to post same-store sales decreases.