McDonald’s (MCD) Stock: Value Deals Win Customers But Earnings Still Fall Short

TLDR

• McDonald’s US same-store sales rose 2.5% in Q3, beating Wall Street’s 2.2% estimate and matching the prior quarter’s growth.
• Adjusted earnings per share of $3.22 missed analyst expectations of $3.32, while revenue of $7.1 billion met forecasts.
• Global same-store sales increased 3.6% during the quarter, slightly below Q2’s 3.8% rise.
• The company cut prices on eight combo meals by 15% in September and brought back menu items like Snack Wraps to attract customers.
• Systemwide sales across company and franchise locations grew 6% as McDonald’s focuses on value offerings in what CEO calls a “challenging environment.”

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McDonald’s posted mixed third-quarter results on Wednesday. The fast-food chain beat sales expectations but fell short on earnings.

The company reported adjusted earnings per share of $3.22. Wall Street had expected $3.33. Revenue came in at $7.1 billion, matching analyst forecasts.

US same-store sales provided a bright spot. They increased 2.5% compared to last year. This topped the 2.2% growth analysts predicted.

McDonald’s Corporation (MCD)

The results marked the second straight quarter of sales beating forecasts. McDonald’s matched its prior quarter’s 2.5% growth rate.

Global same-store sales rose 3.6% during the quarter. This met expectations after a 3.8% increase in Q2.

Value Deals Take Center Stage

McDonald’s has rolled out several initiatives to win back customers. In September, the company cut prices on eight popular combo meals by about 15%.

The chain brought back its Snack Wrap after years of absence. It also launched the $5 Meal Deal and Buy One Get One for $1 promotions.

These moves come as consumers pull back on dining out. High prices from post-pandemic inflation have pushed many people to cook more meals at home.

New Products and Late Night Hours

The burger giant expanded its menu beyond traditional offerings. It introduced McCrispy Strips and rolled out new beverage options.

The beverage expansion includes coffee drinks, refreshers, and “dirty sodas” with add-ins like dried fruit and flavored syrups. These products draw inspiration from McDonald’s short-lived CosMc beverage concept.

Many US locations extended their late-night operating hours. This change aims to capture younger Gen-Z customers.

Systemwide sales, which include both company-operated and franchised locations, grew 6% during the quarter. Sales at company-owned restaurants fell 3%.

The company plans to bring back its Monopoly game both digitally and physically. The promotion has been on hold for nearly a decade.

McDonald’s stock closed at $299.21 on Tuesday, up 3.2% year-to-date. Shares dipped 0.7% in premarket trading following the earnings report.

Restaurant Brands International, which owns Burger King and Popeyes, posted strong results last week. Its third-quarter systemwide sales jumped 6.9% year-over-year.

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