McDonald's Profit Rises, Refranchising Drive Dents Revenue
25 October 2017 - 12:54AM
Dow Jones News
By Ezequiel Minaya
McDonald's Corp. reported revenue sank in its latest quarter
while profit rose, driven by strong sales in its established
locations.
The burger and fast-food restaurant chain said comparable sales
-- which track transactions in restaurants opened at least 13
months -- rose 6%, the ninth quarter in a row the key metric has
advanced and better than the 4.6% growth predicted by FactSet
analysts. In the U.S., comparable sales rose 4.1%, better than the
3.6% expected by analysts.
Overall revenue for the third quarter fell 10% to $5.75 billion
as McDonald's carries out a plan to turn more corporate-owned
stores into franchised locations. Analysts surveyed by Thomson
Reuters had expected $5.74 billion in sales.
Chief Financial Officer Kevin Ozan said the company refranchised
its businesses in China and Hong Kong during the quarter, reaching
its target to refranchise 4,000 restaurants more than a year ahead
of schedule.
The move "brings us closer to the customers and communities we
serve in these markets and creates a better opportunity to unlock
their full growth potential," Mr. Ozan said.
For the period, profit climbed 48% to $1.88 billion, or $2.32
per share, up from $1.50 per share a year ago. Adjusted earnings on
a per-share basis were $1.76, a penny less than expected by
analysts.
The company has targeted delivery as a growth opportunity. The
chain has offered delivery in Asia and the Middle East for several
years and has been testing delivery in the U.S. with UberEATS since
January. In July, McDonald's expanded delivery to 13 countries,
including 3,500 restaurants in the U.S.
McDonald's during the quarter also rolled out new coffee
products, including an Americano and a Caramel Macchiato, in hopes
of poaching Starbucks customers.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
October 24, 2017 09:39 ET (13:39 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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