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Gourmet burgers, global sales drive McDonald's hit results



(Reuters) – McDonald's Corp. ( MCD.N ) reported analysts' forecasts for Monday in the first quarter, helped by the strength of international markets and US consumers who chose more expensive high-end burgers.

FILE PHOTO: A sign for the US fast food restaurant chain McDonald's stands in front of one of their restaurants in Sint-Pieters-Leeuw near Brussels, Belgium, February 1
4, 2018. REUTERS / Yves Herman / File Photo

shares of the world's largest chain of sales surged 4.2 percent to $ 165.10 in pre-market trading as global same-restaurant sales Wall Street forecasts surpassed, pulling higher profits.

A multi-year turnaround plan, launched three years ago by Chief Executive Steve Easterbrook, has produced menu changes, new store technologies and restaurant upgrades to increase traffic.

High-margin "gourmet" burgers, offering fresh and more expensive ingredients, cost $ 6 or $ 7 per time, compared to the chain's value options of $ 1 to $ 3, increasing the average US check value.

McDonald's sales in the US rose 2.9 percent, down 2.7 percent, according to Thomson Reuters I / B / E / S.

Global store sales, which are open at least 13 months, increased 5.5 percent, slightly above the average 3.94 percent estimate. This represents an increase of 7.8 percent in the more mature international markets of Australia, Canada, France, Germany and the United Kingdom.

"(This) shows the power of the brand … worldwide, the numbers were excellent," said Peter Saleh, analyst brokerage BTIG. "The results were very impressive, actually more impressive than we had originally expected."

Excluding items, the company earned $ 1.79 per share, exceeding its estimate of $ 1.67. Total revenue declined 9 percent as a result of the refinancing – a cost-cutting move in which the company sells McDonald's own outlets to a franchisee and receives only a reduction in sales.

The shape of the results was also in contrast to recent quarters as McDonalds and other fast food chains focused on competing with dollar menus, discounts on drinks, and time-limited menu items.

"It's clear that diners now view value options as an integral part of the equation, rather than being so excited or stimulated," said Neil Saunders, managing director of market research firm GlobalData Retail.

Net income increased from $ 1.21 billion, or $ 1.47 per share, to $ 1.38 billion, or $ 1.72 per share.

The company's stock was down 7.9 percent this year, underperforming Dow U.S. Restaurants Index .DJUSRU, which lost only 0.7 percent.

Reporting by Aishwarya Venugopal in Bengaluru; Arrangement by Saumyadeb Chakrabarty and Patrick Graham


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