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McDonald's Overseas Strength Counters US Sales Miss

Published on Oct 29 2018 9:00 AM in Restaurant tagged: Trending Posts / McDonald's

McDonald's Overseas Strength Counters US Sales Miss

McDonald's Corp's investment in online and touch-screen ordering drove a 13th straight rise in global same-store sales in the third quarter, allaying concerns about the world's biggest fast food chain's poor growth in the United States.

International markets including Britain, Canada and Australia, have been a bright spot for McDonald's having launched a restaurant modernization program years before similar efforts in the US.

This drove global comparable store sales 4.2% higher, beating analysts' average forecast of 3.72%, according to Refinitiv estimates.

Renovation Programme

McDonald's has embarked on a massive renovation program for 12,000 U.S. restaurants, introducing new decor, touch-screen kiosks, app-based delivery and equipment to store and use fresher ingredients.

However, the program has reduced overall productivity at one of America's biggest employers and temporary closures of restaurants for renovations has resulted in lost customers.

A rise in prices to compensate drove same-store sales up 2.4% in the third quarter, but that was still its slowest growth in a year and a half. The extra ongoing investment helped reduce total operating income by 21%.

"Taking On A Lot"

"The U.S. team and our franchisees are taking on a lot all at once," Chief Executive Officer Steve Easterbrook told a post-earnings call.

"We're still confident (in the US business) ... the international business provides a good signpost for that," Easterbrook said.

Revenue And Net Income

Overall revenue at McDonald's also fell 7% to $5.37 billion in the quarter, although that was chiefly due to the company's sale of more company-owned restaurants to franchisees.

Net income, down 13%to $1.64 billion, came in at $2.10 per share, beating expectations of $1.99 per share, leaving shares up 6.2% at $176.95.

Bernstein analyst Sara Senatore said US comparable sales in the quarter had defied her worst fears. "These results underscore the persistent strength of the MCD model," she said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition. 

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