McDonald's Sales Boosted by Higher Menu Prices -- Update
01 May 2018 - 12:36AM
Dow Jones News
By Julie Jargon and Allison Prang
McDonald's Corp.'s turnaround continued in the first quarter,
beating revenue and profit expectations and posting an 11th
consecutive quarter of same-store sales growth.
The burger giant's shares rose 3.6% in premarket trading to $164
each.
Globally, it was McDonald's fifth consecutive quarter of
positive guest counts. However, there are signs the chain's sales
momentum in the U.S. is slowing. Although 2.9% same-store sales
growth in its biggest market beat expectations, that growth was
driven by menu price increases and higher-priced menu items, not by
more customer visits.
That was also slower than the 4.5% same-store sales growth in
the fourth quarter, which some analysts attribute to cold weather
that kept many customers at home. Some analysts have questioned how
well the chain's new value menu of $1, $2 and $3 items is
selling.
RBC Capital Markets called the blow to sales from the new value
menu "disappointing."
Global comparable sales rose 5.5%, ahead of a 3.8% that analysts
polled by Consensus Metrix had forecast, and global comparable
guest counts rose 0.8%.
Revenue fell 9.5% to $5.14 billion, more than the $4.98 billion
analysts polled by Thomson Reuters had expected, as McDonald's sold
more restaurants to franchisees. On a constant-currency basis,
revenue fell 15%, McDonald's said.
McDonald's reported a profit of $1.38 billion, or $1.72 a share,
during the quarter, up 13% from a year ago. Omitting a $52 million
expense from the new tax law, which impacted earnings by 7 cents a
share, the company said it made $1.79 a share. McDonald's said
foreign-currency translation also boosted its earnings by 8 cents a
share.
Analysts were expecting a profit of $1.67 a share.
McDonald's has tried to entice customers by switching to fresh
beef in its quarter-pounder burgers, which it aims to offer in all
contiguous U.S. stores by May. It also plans to make its Happy
Meals "more balanced" nutritionally by 2022. By the end of that
year, the company wants at least half of its kids' meals to have
600 calories or less.
Write to Julie Jargon at julie.jargon@wsj.com and Allison Prang
at allison.prang@wsj.com
(END) Dow Jones Newswires
April 30, 2018 10:21 ET (14:21 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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