Quarterly sales suggest success for McDonald's revamped menu

Quarterly results show CEO Steve Easterbrook’s (pictured above on the right) turnaround plan, which includes cheaper drinks, premium burgers and all-day breakfast, may be helping the company. Image: Steve Easterbrook, Twitter

NEW YORK -- McDonald’s Corp. is finally getting customers back into restaurants, a key milestone for a company that suffered years of declines.

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The world’s largest restaurant chain once again saw an increase in U.S. diners last quarter, making the second-straight period that the key measurement was positive after years of declines. U.S. same-store sales — another closely watched benchmark — also topped analysts’ estimates.

The results suggest that chief executive officer Steve Easterbrook is making progress with his turnaround plan, which he launched after taking the helm in March 2015 amid a prolonged sales slump. But investor expectations also have grown. Even with generally positive results on Tuesday, McDonald’s shares were little changed in early trading.

Domestic same-store sales gained 4.1 per cent in the third-quarter, compared with an average estimate of 3.4 per cent. Earnings amounted to $1.76 a share, in line with projections. Revenue also matched predictions, coming in at $5.75 billion (U.S.).

Earnings amounted to $1.76 a share, in line with projections. Revenue also matched predictions, coming in at $5.75 billion.

The results sent the shares up as much 1.6 per cent to $166 in New York.

Easterbrook, 50, has built his comeback on a revamped menu — including cheaper drinks, premium burgers and all-day breakfast in the U.S. — along with a push to franchise more of its restaurants globally.

The customer-traffic recovery is a pivotal moment for the Oak Brook, Ill.-based chain. Company executives had said that McDonald’s lost more than 500 million transactions in its home market since 2012. Most of those customers defected to other traditional fast-food competitors, not fancier or fast-casual chains like Chipotle Mexican Grill Inc. and Panera Bread Co., according to company officials.

The company’s recovery has been largely fuelled by its established markets, rather than emerging economies. McDonald’s is getting more of its revenue from the U.S. and so-called lead international countries than at any point in years.

McDonald’s is now turning to delivery services and digital-ordering options to attract more diners. But the industry remains cutthroat. U.S. competitors are advertising steeply discounted food and new fare.

McDonald’s is also trying to clean up its menu. Two years ago, it pledged to stop serving chicken raised with antibiotics. The chain also has removed artificial preservatives from its popular Chicken McNuggets and recently added chicken tenders to its menu.

SOURCE Craig Giammona, Bloomberg