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McDonald's Delivers First Quarterly SSS Growth in Years


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Finally, McDonald’s has something good to talk about besides all-day breakfast.

According to the company’s third-quarter earnings release, almost all the numbers look great, or at least better than the much-maligned fast-food giant has in the past few years.

The brightest spots were same store sales and EPS. Comps were up 4.0% globally. They were up 0.9% in the U.S. for the first time in two years and jumped 8.9% in China as the brand lapped major supply-chain issues that scared Chinese consumers away. Those numbers easily beat consensus of 1.9%.

EPS for the quarter came in at $1.40, beating analyst estimates of $1.28-$1.30 handily and returned $3.1 billion to investors via repurchases and dividends.

Revenue and income, however, were both down globally 5% and 2% respectively as wages and benefits spending increased in the U.S.  Income in China, however, surged 39% as consumers returned to the restaurants.

In the U.S., third quarter comparable sales increased 0.9%, the segment's first quarterly comparable sales increase in two years. The introduction of the new Premium Buttermilk Crispy Chicken Deluxe sandwich and breakfast, including a return to the classic recipe ingredients for McDonald’s iconic Egg McMuffin, contributed to the segment's performance. 

U.S. third quarter operating income declined 1% as a result of an incremental investment in wages and benefits for all eligible company-operated restaurant employees, designed to improve restaurant performance and enhance the brand. Moving forward, rebuilding customer traffic remains a top priority for the company. 

Wall Street responded to the numbers with a more than 7.5% bump, this is on top of the recent modest gains at the onset of all-day breakfast; which are not reflected in the Q3 numbers.

The rosy report makes one ponder whether McDonald’s has begun a turn toward growth. The fourth quarter will certainly be a telling period for the brand as lower price points for all-day breakfast items could hamstring comp growth even if traffic grows. 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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