McDonald’s back to growth in US as sales elsewhere continue to slide

Burger giant emerges as sector winner in pandemic after revamping digital options

Big Macs from McDonald’s in the state dining room of the White House. Photograph: Saul Loeb/AFP via Getty

Big Macs from McDonald’s in the state dining room of the White House. Photograph: Saul Loeb/AFP via Getty

 

McDonald’s Corp reported a return to growth in its home market, even as global sales slipped for a third straight quarter with the pandemic continuing to roil its international units.

The fast-food chain’s global comparable sales fell 2.2 per cent in the third quarter, according to sales results released on Thursday for the period ended September 30th. US growth of 4.6 per cent was buoyed by a brisk drive-thru business and limited-edition celebrity meals, even as its international units posted declines.

The improving domestic results highlight a growing divide in the restaurant industry, with high-end restaurants struggling to survive as quick-service rivals gain market share. The burger giant has emerged as a sector winner during the pandemic after revamping digital options over the past few years, including touchscreen ordering, with drive-thrus and delivery giving an additional lift.

McDonald’s shares rose 1.3 per cent as of 8.24am in New York, before the start of regular trading, after closing at a record high on Wednesday. Shares were up about 15 per cent this year through Wednesday’s close.

In the US, sales continued to strengthen throughout the quarter, with the company seeing low double-digit comparable sales for the month of September, it said. Still, comparable guest counts remained negative, meaning fewer people placed orders – they just spent more whenever they did.

Breakfast gains

Breakfast has been the most challenging part of the day for McDonald’s, as typical commutes to work and school remain disrupted. Still, the chain said comparable sales were positive in the US during all parts of the day, signalling even breakfast was inching back. Delivery and drive-thru options have helped buoy sales.

Some of the recent success comes from celebrity tie-ups. In the past quarter, McDonald’s partnered with rapper Travis Scott. As a result of the endorsement, the quarter-pounder meal was so popular some locations had burger shortages.

Overseas, comparable sales were negative in France, Spain, Germany and the UK, it said, while Australia and Japan – where the virus has been more under control – remained positive. Sales were also negative in Latin America and China.

McDonald’s also bumped up the quarterly dividend 3.2 per cent to $1.29 a share. Chief executive Chris Kempczinski said in a statement that the move “reflects our strong financial position” and confidence in profitable future growth.

The company plans to report full results for the third quarter on November 9th.

– Bloomberg