McDonald’s beats sales estimates on price hikes

McDonald's beats sales estimates on price hikes
 © Reuters. FILE PHOTO: The McDonald’s company logo is seen on the front of a restaurant in London, Britain, December 10, 2021. REUTERS/May James

(Reuters) – McDonald’s Corp (NYSE:MCD) beat quarterly comparable sales estimates on Thursday, helped by higher menu prices and an increase in restaurant traffic from inflation-weary customers looking for value meals.

Like other fast-food chains, McDonald’s has been forced to raise prices of its burgers and fries to keep up with surging commodity costs, but its meals are still cheaper than eating out at dine-in restaurants keeping demand resilient even as consumer spending power gets crimped.

Visits to the burger chain’s U.S. restaurants increased 6.2% in September, outpacing traffic to the broader quick-service restaurant space which showed just a 0.8% increase, according to data from Placer.ai, a location analytics firm.

Chipotle Mexican Grill Inc (NYSE:CMG) on Tuesday also beat quarterly sales and profit estimates as it passed on higher prices to customers.

McDonald’s global same-store sales increased 9.5% in the third quarter ended Sept. 30, compared with estimates for a 5.8% rise, according to IBES data from Refinitiv.

Comparable sales for McDonald’s in the United States, the company’s biggest market, rose 6.1% in the reported quarter helped by higher prices.

McDonald’s iconic Big Mac burger was selling for $5.15 in June, up from $4.93 a year earlier, according to the Economist magazine’s widely used index of prices.

Analysts have noted that an easing in gas prices also boosted third-quarter restaurant sales in the United States in general after a slowdown in June.

However, McDonald’s total revenue fell 5% to $5.87 billion in the reported quarter, due to the impact of a stronger dollar. That still beat estimates of $5.69 billion.

The company’s net income fell 8% to $1.98 billion, or $2.68 per share.

Source: Reuters