By DEE-ANN DURBIN
Higher costs and common unease in regards to the economic system didn’t hold prospects away from McDonald’s within the third quarter, with the burger big reporting a stronger-than-expected gross sales and income.
McDonald’s Chief Financial Officer Ian Borden __ who was promoted to the position final month __ stated U.S. costs had been 10% larger than final 12 months within the July-September interval. But whereas some lower-income shoppers appeared to shift to cheaper menu objects, general demand remained sturdy.
McDonald’s CEO Chris Kempczinski stated revamped shops, sooner service, upgraded menu objects and fashionable promotions are all drawing prospects regardless of larger costs.
“Consumers are willing to tolerate it and they’re willing to do that because of all the other things we have done to strengthen our offering,” Kemoczinski stated Thursday in a convention name with traders.
Still, the corporate stated larger meals and vitality prices are pinching franchisees and shoppers, particularly in Europe, and can proceed to stress income for the subsequent few quarters. McDonald’s has stated it expects meals and paper prices to be up between 12% and 14% this 12 months, whereas its labor prices are up 10%.
“There is increasing uncertainty and unease about the economic environment,” Kempczinski stated.
McDonald’s stated its world same-store gross sales, or gross sales at areas open no less than a 12 months, rose 9.5% within the July-September interval. That was nicely forward of the 5.8% enhance Wall Street was anticipating, in line with analysts polled by FactSet.
U.S. same-store gross sales rose 6%. Most of that enhance got here from larger costs, however McDonald’s stated U.S. retailer visitors was barely larger within the third quarter in comparison with the second quarter, when it was flat.
Same-store gross sales fell in China. Kempczinski stated 33 cities with 65 million residents had been both in full or partial COVID lockdowns throughout the quarter. But Kempczinski stated McDonald’s stays bullish about China, the place it plans to open a report 800 eating places this 12 months.
“We do hope and expect that in 2023 the situation in China is going to improve for us,” Kempczinski stated.
Kempczinski stated promotional exercise has been a vivid spot, drawing again prospects and growing engagement in loyalty packages. Over the summer season, the Camp McDonald’s program within the U.S. supplied offers, merchandise and in-app live shows, whereas McDonald’s in Australia relaunched a well-liked Monopoly program.
That exercise will proceed to drive gross sales within the fourth quarter. In October, grownup Happy Meals with limited-edition toys designed by the streetwear model Cactus Plant Flea Market drove the corporate’s highest-ever weekly digital gross sales, Kempczinski stated. And McDonald’s lately launched a limited-time “farewell tour” for its fashionable McRib sandwich within the U.S., though Kempczinski hinted the sandwich may reappear on the menu sooner or later.
Revenue fell 5% to $5.87 billion, however that was higher than the $5.7 billion that trade analysts had anticipated. Overseas income was weaker due to the sturdy greenback; 60% of McDonald’s gross sales come from exterior the U.S., Borden stated.
Net revenue fell 8% to $1.98 billion, or $2.68 per share, a dime higher than Wall Street projections.
Shares of the Chicago burger big rose greater than 3.5% in morning buying and selling Thursday.
Source: www.bostonherald.com”