McDonald’s reported first-quarter sales and profit that outpaced analysts’ projections, a renewed sign the fast food chain is picking up customers amid stubborn inflation and higher menu prices.
The key metric of comparable sales rose nearly 13 per cent above the average estimate of 8.2 per cent compiled by Bloomberg. United States results also handily topped projections by that measure, with the company adding that comparable guest counts rose. Earnings in the quarter, excluding some items, were $2.63 a share, also beating estimates.
“Amid a challenging operating environment, customer demand for McDonald’s brand remains strong,” chief executive, Chris Kempczinski, said in the statement accompanying results.
The shares rose 1 per cent during early trading in New York. The stock has gained 11 per cent in 2023 through Monday’s close, outpacing the advance off the S&P 500 Index.
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The company’s results show the resilience of the McDonald’s business – and US diners – in the face of relentless inflation for basic goods including food. McDonald’s said it benefited from “strategic menu price increases” in the US as well as growth in digital sales and delivery. The Big Mac seller is viewed as a value offering during economic uncertainty, when consumers move to trade down from higher-price peers.
Same-store sales topped estimates in all geographic segments, with strong results from Japan, Australia, Canada, France, Germany and the UK. The company gets more than half of its revenue from international markets.
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The chain said restructuring costs hurt earnings by 18 cents a share or $180 million. In a bid to reduce costs and accelerate decision-making, the company earlier this year announced a restructuring that includes the lay-off of hundreds of employees. McDonald’s has also cut the pay packages of some corporate staff.
Kempczinski said the results show the company’s strategy is paying off, adding that it is seeing “significant customer-satisfaction improvement around the world”. – Bloomberg
