NEW YORK, N.Y. – The launch of all-day breakfast helped McDonald’s record higher sales at established U.S. locations for a fifth straight quarter, but the boost from that is shrinking and the company is hoping new menu items and recipe tweaks will keep customers coming back.
McDonald’s said sales rose 1.3 per cent at established U.S. locations in the third quarter, matching what Wall Street analysts expected. That’s down from the 1.8 per cent rise the world’s biggest burger chain reported in the previous quarter.
Worldwide, sales grew 3.5 per cent at established locations, far exceeding the 1.3 per cent growth analysts were expecting, according to FactSet.
The company recently added more items to the all-day breakfast menu and is testing a Happy Meal for kids with egg and cheese McMuffins and other breakfast items. It’s also tweaking some recipes to appeal to Americans concerned about unappetizing ingredients in their food. Artificial colours, flavours and preservatives were removed from Chicken McNuggets nationwide in August, leading sales of the classic menu item to spike 10 per cent, CEO Stephen Easterbrook said in a conference call with investors and analysts.
McDonald’s may also be facing increasing competition from customers’ kitchens. Grocery prices have fallen, making it cheaper for Americans to cook at home than eat out. Kevin Ozan, the company’s chief financial officer, said less expensive groceries “may be impacting consumer behaviour.” Another hamburger chain, The Wendy’s Co., made similar comments recently, blaming weaker-than-expected sales growth on cheaper groceries that kept customers at home. Next week, the parent company of Burger King will report its results.
Overall, McDonald’s reported better-than-expected adjusted earnings and revenue for the third quarter. It posted net income of $1.28 billion, or $1.50 per share, in the quarter that ended Sept. 30. Adjusted earnings came to $1.62 per share, surpassing the $1.48 per share Wall Street analysts expected, according to Zacks Investment Research.
The Oak Brook, Illinois-based company reported revenue of $6.42 billion, above the $6.29 billion analysts expected.
Shares of McDonald’s Corp. rose $3.36, or 3 per cent, to $113.93 in afternoon trading Friday.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MCD at http://www.zacks.com/ap/MCD
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