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McDonald’s Growth Surges After All-Day Breakfast Lifts Sales

Published on Jan 26 2016 2:50 PM in Restaurant tagged: McDonald's / Oak Brook / Bloomberg

McDonald’s Growth Surges After All-Day Breakfast Lifts Sales

McDonald's is waging a comeback effort under CEO Steve Easterbrook, posted its best quarterly growth in almost four years after a move to serve breakfast all day helped fuel US sales.

Global same-store sales surged five per cent in the fourth quarter, the Illinois-based company said in a statement.

Analysts had estimated 3.2 per cent. Profit also topped predictions, raising optimism that Easterbrook can pull McDonald’s out of its worst slump in more than a decade.

The results validated Easterbrook’s move in October to start serving breakfast all day in the US. Though the change satisfied a longstanding demand from customers, it created some headaches for franchisees, who had to revamp their kitchens. Easterbrook, who took the CEO job in March, also has focused on speeding up service and improving order accuracy.

“It looks like they’re definitely under way with the turnaround,” said Bloomberg Intelligence analyst Jennifer Bartashus. “A good chunk of it is the all-day breakfast.”

Excluding some items, fourth-quarter earnings amounted to $1.28 a share, compared with a projection of $1.23. Revenue was $6.34 billion in the period, beating the $6.23 billion estimate. US same-store sales jumped 5.7 percent, helped in part by mild weather. Analysts had predicted 2.7 percent.

Long-Term Question

Still, it’s unclear if selling Egg McMuffins beyond the morning rush will be a long-term benefit, Bartashus said. “The real question is whether that will be a sustained positive influence beyond people just trying it out for the first time.”

Like Starbucks, which reported quarterly results last week, McDonald’s cited France as being a weak spot. Business there was hurt by last year’s terrorist attacks in Paris. McDonald’s saw stronger results in the UK, Canada and Australia, as well as positive same-store sales in Russia and China.

“We took bold, urgent action in 2015 to reset the business and position McDonald’s to deliver sustained profitable growth,” Easterbrook said in Monday’s statement. “We enter 2016 committed to managing the business for the long term.”

News by Bloomberg, edited by Hospitality Ireland

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