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McDonalds
Corp.
MCD 6.31%
Still struggling to attract more US customers, he managed to increase sales in the last quarter by charging more for his food products.
The company has been trying to revive US traffic growth by modernizing its restaurants, serving fresh, rather than frozen, beef burgers and offering dollar drinks. The chain has also been trying to make its food healthier by removing preservatives from its hamburgers.
However, the 2.4% growth in store sales in the domestic market in the third quarter – which is about the same as analysts' expectations – was largely driven by higher menu prices, due in part to higher prices. 3% of the cost of commodities for the quarter.
Worldwide, the restaurant chain grew, surpassing expectations for same-store sales growth, with a 4.2% increase, for a 13th consecutive quarter of growth in sales. sales figure of comparable stores.
"The strength of non-US markets is encouraging if we take into account broader concerns about slowing economic growth," said David Tarantino, an analyst at Baird.
McDonald's shares rose 6.3% on Tuesday.
US franchisees, who own about 95 percent of the company's more than 14,000 restaurants across the country, say the only way to grow is to attract more customers. However, competing fast-food chains stole McDonald's shares in the mornings, which account for about 25% of the chain's sales in the United States, offering low-priced lunches.
McDonald's also loses food purchases for home consumption.
"It continues to be a battleground. It's a fight of market share on the traffic, "said Tuesday to investors Steve Easterbrook, CEO of McDonald's. "We want to do better at breakfast."
The company has announced plans to introduce new dishes for breakfast later this year and to offer more regional breakfast deals.
A group of some 400 franchisees recently came together to discuss the creation of an independent association to address concerns about profitability. Franchisees are worried that their investment will not pay for their restaurant renovation efforts, which is accelerating.
Some stores have been completely rebuilt while others have been upgraded with features such as touch screen control kiosks, mobile pickup areas and digital menu boards in the process.
Easterbrook said the company was willing to discuss with franchisees what it could do better.
McDonald's said this year it plans to add 600 new restaurants and capital expenditures of about $ 2.5 billion. Of this amount, $ 1.6 billion will go to the United States, compared to $ 1.5 billion in July.
The company said half of all McDonald's restaurants in the US should be upgraded by the end of the year, as part of the largest construction project in the chain's history.
According to franchisees, closures or construction disruptions have resulted in lost sales for many restaurants. McDonald's CFO Kevin Ozan acknowledged that remodeling was very quick and the company was working to minimize the number of times restaurants were closed due to remodeling.
A report from research firm Gordon Haskett also revealed that once the upgrade was complete, customer traffic increased significantly.
McDonald's revenue was down 6.7% from the same quarter last year at $ 5.37 billion as a result of the continued sale of restaurants to franchisees. In recent years, the company has shifted its business model to a franchise-based model, which it believes provides a more stable and predictable revenue stream.
The company's third-quarter earnings declined 13 percent to $ 1.64 billion, while earnings per share fell to $ 2.10 from $ 2.32 a year earlier. Excluding prior year restructuring and impairment gains and charges, earnings per share increased 19% and exceeded analysts' expectations.
-Allison Prang contributed to this article.
Write to Julie Jargon at [email protected]
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