Chigaco - McDonald’s posted first-quarter profit that beat analysts’ estimates, with all-day breakfast and McPick value deals fuelling a resurgence in its US business.
Net income rose to $1.23 a share in the period, the Oak Brook, Illinois-based company said in a statement Friday. Analysts estimated $1.16, on average. Same-store sales increased 5.4 percent in the US, while analysts polled by Consensus Metrix projected a 4.6 percent gain.
The results show CEO Steve Easterbrook’s plan to revive the world’s largest restaurant chain is gaining steam. Since taking the helm more than a year ago, he has revamped drive-thru ordering, tweaked kitchen operations and slimmed down the menu.
Recently, the company has attracted American customers with all-day breakfast along with McPick two-for-$2 and two-for-$5 deals. Globally, comparable-store sales rose 6.2 percent in the quarter, the best performance in four years.
“They’re getting back to why customers fell in love with the brand,” said Michael Halen, an analyst at Bloomberg Intelligence. “It’s really just basic blocking and tackling.”
Read also: McDonald’s and its 267% rally get no respect from Wall Street
The shares rose 2.2 percent to $128.50 at 8:20 a.m. in early trading on Friday. McDonald’s had gained 6.5 percent this year through Thursday’s close, compared with a 2.3 percent advance for the Standard & Poor’s 500 Index.
Revenue beats
While revenue dropped 0.9 percent to $5.9 billion in the quarter, that beat analysts’ $5.81 billion average projection.
McDonald’s, which gets about two-thirds of its revenue from international locations, also is seeking to draw diners overseas with new food and deals. In Germany, it’s advertising a low-priced basics menu, along with new double-chicken burgers topped with honey mustard. The company’s largest European markets, Germany, France and the U.K., are included in its international lead markets unit.
In March, McDonald’s said it’s seeking partners in Asia to accelerate its growth plans. The Big Mac seller plans to add more than 1 500 restaurants in China, Hong Kong and Korea in the next five years. The company also recently said it’s trying to find strategic partners for Taiwan and Japan.
Division sales
Same-store sales, which show the performance of McDonald’s restaurants open at least 13 months, are considered a key indicator. The estimates were compiled by Consensus Metrix.
Sales by that measure rose 5.2 percent in McDonald’s international lead markets unit, which includes the UK, Australia and Canada. Analysts estimated a 4.1 percent increase. Comparable sales increased 3.6 percent in the high-growth markets. Analysts projected a 3.4 percent advance. Same-store sales rose 11 percent in the foundational markets segment, lifted by a rebound in Japan. Analysts estimated a 6.2 percent gain.
“Our turnaround is taking hold,” Easterbrook said in the statement. “The ongoing investments we’re making in running great restaurants and delivering what matters most to our customers are beginning to yield sustained positive results.”
BLOOMBERG