Regulars Lift McDonald's Sales -- Update
April 25 2017 - 12:38PM
Dow Jones News
By Julie Jargon
McDonald's Corp.'s focus on regular customers is paying off.
The burger giant recently pledged not to chase customers who
rarely eat fast food. Instead, McDonald's has made its hearty
breakfast items available all day, priced soda and coffees at $1
and introduced new Big Mac sizes -- all at the behest of
cost-conscious regulars.
"Our greatest opportunities are at the core of our business,"
Chief Executive Steve Easterbrook told investors Tuesday.
The tighter focus led to better-than-expected sales globally and
in its critical U.S. market in the first quarter.
The company is trying to narrow the gap between its prices and
those at the grocery store by raising menu prices more slowly than
the rate of supermarket inflation. McDonald's is testing new mobile
ordering and payment options and automated cashiers. The company
said Tuesday it plans to expand a delivery service it has tested in
Florida.
Mr. Easterbrook said each initiative is designed to bring "the
biggest benefit to the most customers in the shortest amount of
time."
At the same time, McDonald's wants to improve the quality of its
food. Next year it plans to switch to fresh, rather than frozen,
beef in Quarter Pounders. Next week a higher-end, customizable
"Signature Crafted" burger menu will debut nationwide. Those
burgers will also be made with fresh beef next year.
Global same-store sales in the quarter rose 4%, well above the
1.3% increase anticipated by analysts in a Consensus Metrix survey.
Same-store sales in the U.S. rose 1.7%, beating the 0.8% decline
analysts expected.
McDonald's has also transferred ownership of many restaurants to
independent operators. The model, embraced by other fast-food
chains as well, lets companies collect a piece of sales without the
costs and headache of managing hundreds of stores. During the first
quarter, revenue from franchised restaurants climbed 5.3% as sales
from company-operated restaurants, which makes up a larger chunk of
the top line, slipped 9.1%.
In all, McDonald's earned $1.21 billion in the quarter, or $1.47
a share, up from $1.12 billion, or $1.25 a share, a year earlier.
Revenue slipped 3.9% to $5.68 billion. Analysts polled by Thomson
Reuters had expected $1.33 a share on $5.53 billion in revenue.
McDonald's shares rose 5% on Tuesday to trade at $141 a
share.
Anne Steele contributed
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
April 25, 2017 12:23 ET (16:23 GMT)
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