-
McDonald’s (MCD, $265.11) on Thursday said traffic to its U.S. restaurants is growing, helping the fast-food giant top analysts’ expectations for its quarterly earnings and revenue. The company is going against a trend seen by other chains, all of whom have faced dwindling footfall after menu price hikes. Shares of the company closed more than 3% higher on Thursday.
-
McDonald's reported adjusted earnings per share of $2.68, surpassing the Zacks Consensus Estimate of $2.57 by 4.3%. In the prior-year quarter, MCD reported an adjusted EPS of $2.86. The company reported a third-quarter net income of $1.98 billion, or $2.68 per share, down from $2.15 billion, or $2.86 per share, a year earlier. Net sales fell 5% to $5.87 billion. Excluding the impact of foreign currency, McDonald’s revenue rose 2% in the quarter.
-
In McDonald’s home market, same-store sales increased by 6.1%. The company credited price hikes and an increase in customer visits, fueled by marketing promotions. In the third quarter, U.S. menu prices were up roughly 10% compared with the year-ago period.
Why it matters
Many restaurants, including McDonald’s and its franchisees, have turned to price hikes to mitigate higher food and labor costs, but inflation-weary customers have been cutting back on eating out to save money. McDonald’s price hikes have scared away some of its lower-income customers, who aren’t visiting as frequently or are trading down to cheaper menu items as inflation puts pressure on their budgets. However, the chain is pulling in higher-income customers who are switching from dining out to opting for fast food.
