McDonald's Sales Boosted by Higher Menu Prices -- 2nd Update
01 May 2018 - 3:15AM
Dow Jones News
By Julie Jargon
McDonald's Corp.'s global sales and profit growth in the first
quarter was overshadowed by weakness in its key U.S. market.
The company on Monday said customer visits in the U.S. fell in
the quarter due to greater competition at breakfast. Breakfast had
long been a McDonald's strong suit, especially when the chain
started selling many breakfast items all day in late 2015.
Chief Executive Steve Easterbrook acknowledged that breakfast
had become a "market share fight overall." Taco Bell sells
breakfast items for $1 and Burger King has a two-for-$4 breakfast
deal. Some McDonald's franchisees in March began offering their own
two-for-$4 breakfast promotion, but it was too late in the quarter
to make a difference, Chief Financial Officer Kevin Ozan said.
Same-store sales in the U.S. rose by 2.9%, thanks to higher menu
prices and customers adding extra items to their orders from the
chain's new $1, $2, $3 value menu. Mr. Easterbrook said the menu
has met internal sales expectations since it was introduced in
January but that the company will continue to adapt it as it learns
which items customers prefer.
"We do want to get the guest count moving," Mr. Easterbrook
said. McDonald's shares rose more than 5% to $166.76 in midday
trading.
The company in May plans to advertise that its quarter-pound
burgers are now made with fresh, rather than frozen, beef. Mr.
Easterbrook said customers have responded positively to the burgers
in the markets where they've been tested.
Globally, it was McDonald's fifth consecutive quarter of
positive guest counts, due in particular to strength in the U.K.
and Germany.
Global comparable sales rose 5.5%, ahead of the 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 expected a profit of $1.67 a share.
Allison Prang contributed to this article
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
April 30, 2018 13:00 ET (17:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
McDonalds (NYSE:MCD)
Historical Stock Chart
From Mar 2024 to Apr 2024
McDonalds (NYSE:MCD)
Historical Stock Chart
From Apr 2023 to Apr 2024