McDonald’s US Sales Beat as Free Bacon, Value Meals Attract Diners

McDonald’s US Sales Beat as Free Bacon, Value Meals Attract Diners
A Double Cheeseburger, Small Soft Drink and Small Fries meal is advertised at a McDonald's restaurant in San Jose, Calif., Wednesday, July 22, 2009. (AP Photo/Marcio Jose Sanchez)

McDonald’s Corp. lured diners with a short-term bacon promotion, value meals and redesigned restaurants that helped lift its U.S. same-store sales above Wall Street estimates for the first time in four quarters on April 30.

The company has tweaked its menu to add new food items such as donut sticks and launched a new “2 for $5” deal while sprucing up its restaurants with trendier furniture, digital menu boards, and self-ordering kiosks.

The efforts are part of Chief Executive Officer Steve Easterbrook’s “Experience of the Future” program that was launched nearly three years ago in the United States to improve delivery service and the ambiance at its restaurants.

“For the first time since we’ve begun our Experience of the Future rollout, we are seeing benefits to our overall U.S. sales comp,” Easterbrook said on a call with analysts.

McDonald’s same-store sales rose 4.5 percent in the United States, well above analysts’ expectations of a 3.03 percent rise, according to Refinitiv IBES. Global same-store sales also grew by a better-than-expected 5.4 percent.

“The trends are definitely improving in the U.S. and that is a big deal,” Edward Jones analyst Brian Yarbrough said.

Although traffic at U.S. restaurants was negative, average check—the amount a diner spends on each visit—rose on the back of higher menu prices.

The company forecast commodity prices to rise 2 percent to 3 percent in 2019, compared with its previous projection of an increase of 1 percent to 2 percent.

Overall, it expects expenses to be higher compared with its previous forecast due to increased investments in technology.

Excluding one-time items, the company earned $1.78 per share. Total revenue fell about 4 percent to $4.96 billion, due to its move to franchise a majority of its restaurants.

Analysts were expecting a profit of $1.75 per share on revenue of $4.93 billion.

The company’s shares were last up about 0.4 percent and hit a record high of $200 earlier in the day.

By Nivedita Balu