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McDonald’s beat Wall Street’s quarterly profit forecast Wednesday, but fewer customers visited its U.S. restaurants, a sign that the fight to win price-conscious diners is not over. Shares rose 2.27% to $269 in premarket trading at 7:13 a.m. Eastern, according to Nasdaq.
The company reported adjusted earnings of $3.57 a share for the third quarter, above the $3.38 analysts expected in the LSEG survey cited by CNBC ahead of the results. Revenue increased 1% to $7.157 billion, below the $7.29 billion forecast. Reported earnings were $3.51 a share, up 10% from a year earlier.
Fewer U.S. visits, bigger checks
U.S. comparable sales, which measure sales at established restaurants, fell 0.2%. That was a smaller decline than the 0.5% drop analysts had expected, according to CNBC’s StreetAccount estimate.
In its earnings release, McDonald’s said falling comparable guest counts were largely offset by growth in the average check. It did not give a percentage decline in U.S. traffic. Bigger checks can reflect menu prices, the mix of items customers buy or the size of orders; they do not mean more people walked through the door.
For families, the result keeps attention on meal deals and whether eating out feels worth the price. For restaurant owners and suppliers, the harder number is traffic: keeping sales nearly flat by collecting more per order is different from serving more customers.
Chief Executive Chris Kempczinski said the company was encouraged by improvement in the U.S. as the quarter progressed following its action on value. That is a description of progress, not a declaration that customer visits have recovered.
International business supports growth
Global comparable sales rose 1.5%. Sales at established restaurants in international operated markets increased 1.4%, led by Germany and Australia, with France partly offsetting those gains. International developmental licensed markets rose 4.2%, with Japan contributing growth and China recording negative comparable sales.
Systemwide sales, which include sales at company-operated and franchised restaurants, increased 4% to more than $38 billion. That measure is much larger than McDonald’s own revenue because franchisees keep most of the sales they collect.
Consolidated operating income rose 7% to $3.595 billion. Excluding restructuring-related charges, adjusted operating income increased 8%. McDonald’s also declared a 4% increase in its quarterly cash dividend to $1.93 a share.
The early stock gain suggests investors welcomed the earnings beat and a less severe U.S. sales decline than expected. The next test is whether value offers bring back repeat visits without putting too much pressure on restaurant profits. Premarket trading can be thin, and the price may change before the 9:30 a.m. opening.
JBizNews Desk | New York
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