McDonald’s (MCD.N) exceeded market expectations for quarterly comparable sales on Thursday, as the restaurant chain’s affordable burgers and fries attracted cost-conscious diners in an inflationary environment. The company’s shares rose over 2% to $298.82 in premarket trading.
Despite the need for U.S. restaurant chains, including McDonald’s, to raise prices to offset higher costs, the company has managed to keep its prices lower than its competitors.
To attract more diners, McDonald’s introduced promotional deals such as the Grimace Birthday Meal, which featured purple milkshakes in honor of the Grimace character in McDonald’s ads. These initiatives, along with improved staffing levels, have helped McDonald’s gain market share from its peers.
According to Placer.ai data, traffic at McDonald’s U.S. locations increased by 8.4% in the second quarter, while overall traffic at fast-food and quick-service chains only grew by 1.2% during the same period.
McDonald’s global comparable sales surged by 11.7% in the second quarter, surpassing analysts’ average estimate of an 8.88% increase.
The easing costs of key ingredients like chicken, cheese, and pork have also contributed to McDonald’s success. The company’s total restaurant margins in the United States rose by 12% in the quarter, with margins at company-operated U.S. stores increasing by 11%.
In the quarter, comparable sales for McDonald’s in the United States climbed by 10.3%, exceeding estimates of an 8.6% rise. Internationally operated markets also experienced growth, with comparable sales rising by 11.9%, surpassing expectations for an 8.2% increase.
McDonald’s net income nearly doubled to $2.31 billion in the three months ended June 30. Excluding items, the company earned $3.17 per share, surpassing analysts’ average expectation of $2.79 per share.
Reporting by Deborah Sophia in Bengaluru and Kailyn Rhone in New York; Editing by Anil D’Silva. Our Standards: The Thomson RushHourDaily Trust Principles.
