McDonald’s (MCD) beat earnings estimates for the third quarter as higher menu prices boosted sales growth.
Global systemwide sales — which include sales at company-owned and franchised restaurants — increased 11%. Global same-store sales jumped 8.8%, higher than analysts’ estimates of 7.79%, per Bloomberg consensus data.
Revenue jumped 14% year-over-year to $6.69 billion, higher than estimates of $6.52 billion. Adjusted earnings per share came in at 3.19, up 19% from last year.
CEO and President Chris Kempczinski said the results demonstrate the company’s “strength as the industry leader” in the release.
“The macroeconomic environment is unfolding in line with our expectations for the year, and we continued to deliver convenience and value for our customers,” he said.
Shares of McDonald’s are down nearly 3% year-to-date, trailing behind Restaurant Brands International (QSR) which is up nearly 2% year-to-date, but ahead of YUM! Brands (YUM) shares, which are down nearly 7%.
As consumers buckled down on where they spent their money, McDonald’s says it got a boost in the US.
In the US, sales benefitted from higher menu prices, new marketing campaigns, and growing digital and delivery orders. Beginning in August, the company launched its As Featured In Meal campaign that showed meals that have appeared in films, movies or TV shoes.
Baird analyst David Tarantino said McDonald’s typically gains foot traffic when there are “mounting macroeconomic uncertainties” in a note to clients, adding that the Golden Arches is “one of the best positioned brands…to navigate a tougher backdrop.”
During the financial crisis from 2008 to 2009, sales growth averaged 3.4% in the U.S. and 6.9% in Europe, he said.
The company also reported systemwide digital sales — which includes sales made on the app, delivery or on the kiosk — totaled $9 billion across its six biggest markets, making up 40% of total sales. That’s more than Q2, which saw $8 billion in digital sales.
The earnings rundown
Here’s what McDonald’s reported, compared to Wall Street estimates per Bloomberg consensus data:
Revenue: $6.69 billion versus $6.52 expected
Adjusted EPS: $3.19 versus $2.98 expected
Same-store sales growth: 8.8% versus 7.79% expected
US sales growth: 8.1% versus 7.5% expected
International operated markets sales growth: 8.3% versus 8.51% expected
International developed licensed markets sales growth: 10.5% versus 8.27% expected
McDonald’s also incurred pre-tax charges of $26 million, or $0.02 per share for the quarter, primarily related to its restructuring plan that saw the company lay off an undisclosed number of workers in early April. McDonald’s expects the total annual charge to be $224 million for the year.
Investors are awaiting for the call to hear more from executives, set to take place at 8:30 AM eastern on Monday.
One of the questions that may be top of mind is any concerns over the rise of interest around weight loss drugs, known as GLP-1s.
In a note to clients from TD Cowen’s Consumer Team, they said the impact to quick-service restaurants, like Restaurant Brands International, McDonald’s, Yum! Brands and Domino’s (DPZ) compared to other dining categories isn’t as large as many expect due to two factors.
Quick service has a “higher exposure to low income consumers who are less likely to pay for GLP-1s out of pocket,” and “higher international exposure, where obesity rates are significantly lower & Wegovy is generally not approved or unavailable for weight-loss.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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