McDonald’s second-quarter global comparable sales beat Wall Street estimates on Wednesday, as affordable meal bundles and promotions drew in budget-conscious diners looking to stretch their dollars amid economic uncertainty.
Its shares rose 2.3% in early trading as strong demand in the US and international markets powered a 3.8% rise in global same-store sales, above expectations of a 2.4% rise, according to data compiled by LSEG.
Fast-food chains have seen competition heat up as companies such as McDonald’s, Domino’s Pizza and Taco Bell owner Yum Brands double down on value meals to counter a slowdown in demand, mainly among the lower-income households.
To improve sales, McDonald’s launched a limited-time Happy Meal offer for kids and adults tied to A Minecraft Movie promotion in April. In May, it introduced McCrispy Chicken Strips as a permanent menu item.
These promotions are in addition to the $5 meal deal and the buy-one, add-one for $1 offers launched last year.
CEO Chris Kempczinski said re-engaging the low-income consumer is “critical”, as they typically visit its restaurants more frequently than middle- and high-income groups.
“This bifurcated consumer base is why we remain cautious about the overall near-term health of the US consumer,” he said.
Menu innovation and promotions had also helped Domino’s report upbeat US same-store sales, while weakening demand hurt sales at Yum Brands and Chipotle Mexican Grill.
For the second quarter, customer visits to McDonald’s outperformed the wider quick-service restaurant category, data from foot traffic tracking firm Placer.ai showed.
“While rivals like Yum Brands and Chipotle struggled with consumer pullback, McDonald’s played to its strengths by leaning into value, nostalgia and limited-time promotions,” eMarketer analyst Zak Stambor said.
Comparable sales in the US, McDonald’s biggest market, grew 2.5%, compared with a 0.7% decline a year ago.
Sales in its business segment, where restaurants are operated by local partners, jumped 5.6%, led by Japan, while it rose 4% in international markets, on demand recovery in the UK, Canada and France.
Adjusted net income of $3.19 per share exceeded estimates of $3.15.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.