A McDonald's restaurant in East Palestine, Ohio. The burger chain's comparable sales in the U.S. rose 2.4 per cent in the third quarter.Gene J. Puskar/The Associated Press
McDonald’s MCD-N beat estimates for third-quarter global comparable sales on Wednesday as affordable meal offers from the fast-food giant helped whet demand even as consumers remained selective with their spending.
The burger chain posted global same-store sales growth of 3.6 per cent, slightly ahead of analysts’ average estimate of a 3.55-per-cent increase, according to data compiled by LSEG, driven by strength across its U.S. and international markets.
Fast-food chains including McDonald’s, Domino’s Pizza and Taco Bell owner Yum Brands have rolled out cheaper meal bundles and limited-time offers to offset a slowdown in restaurant traffic, as stubbornly high inflation, slower wage growth and rising menu prices discourage price-sensitive customers.
McDonald’s has kept its US$5 meal deal in place for more than a year, prioritized menu innovation and intensified marketing efforts to revive demand among low-income diners.
Demand spiked in July on the launch of the $2.99 Snack Wraps, though momentum eased in August and September, BTIG analyst Peter Saleh said in a note. In September, the company reintroduced its Extra Value Meals and began working with franchisees to standardize a 15-per-cent discount on combo meals nationwide, up from the current 10 per cent to 11 per cent.
But sustaining deep discounts may prove challenging for franchisees once financial support from McDonald’s tapers off, analysts have warned.
Overall visits to McDonald’s fell 3.5 per cent between July and September from a year ago, compared with a 2.3-per-cent decline across the quick-service category, according to data from foot traffic-tracking firm Placer.ai.
Shares of the company were down 1 per cent in premarket trading.
Comparable sales in the U.S., its largest market, rose 2.4 per cent in the quarter ended Sept. 30, compared with a 0.3-per-cent rise a year earlier.
Sales in its business segment where restaurants are operated by local partners jumped 4.7 per cent, led by Japan, while international market sales rose 4.3 per cent, driven by Germany and Australia.
Quarterly adjusted net income came in at US$2.31-billion, or US$3.22 a share, compared with US$2.32-billion, or US$3.23 a year ago.