MCD McDonalds Corp

By Julie Jargon 

McDonald's Corp. beat profit and sales expectations for the third straight quarter, signaling that a turnaround that began last year is sustainable.

The burger giant on Friday cited all-day breakfast and a new value menu for boosting sales and profit in its critical U.S. market in the first quarter. Evidence that Chief Executive Steve Easterbook's turnaround plan was gaining traction first emerged in the third quarter of last year, when McDonald's U.S. division posted its first quarterly increase in same-store sales in two years.

It has been just over a year since Mr. Easterbrook took the reigns at McDonald's, and in that time he has pushed the company to move quickly to improve operations, simplify the menu and improve the food. When McDonald's introduced all-day breakfast last October in response to consumer demand -- the biggest menu change at McDonald's in years -- company and industry watchers expected demand for Egg McMuffins at lunchtime to eventually wane, but it is still driving sales.

After stumbling with a two-for-$2 menu in January, McDonald's changed its new value offering to two for $5, which it pointed to as another sales driver in the quarter. Analysts caution that the effort to arrive at the right price point and product mix for a national value menu remains a work in progress. Some markets are testing 2-for-$3.50 and 2-for-$4 deals, and some locations' value menus include breakfast items.

Sales at McDonald's U.S. restaurants open at least 13 months rose 5.4%, topping the 4.6% growth rate analysts expected and slowing just slightly from the fourth quarter's 5.7% pace. Sales in high-growth markets including China, where the chain has previously struggled, also posted higher-than-expected growth. Globally, same-store sales rose 6.2%.

"The continued momentum in the U.S. business was encouraging, and the company's other markets all came in above expectations," Citi Research analyst Gregory Badishkanian said in a note to investors. "Maintaining the momentum will be key...especially as the company laps the all-day breakfast introduction later this year."

For the first quarter, McDonald's reported a profit of $1.1 billion, up from $811.5 million. Per-share earnings rose to $1.23 from 84 cents, topping analysts' expectations of $1.16.

Revenue fell 0.9% to $5.9 billion, though it still topped Wall Street's forecasts of $5.82 billion.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

April 22, 2016 10:31 ET (14:31 GMT)

McDonalds (NYSE:MCD)
Historical Stock Chart
From Mar 2024 to Apr 2024

McDonalds (NYSE:MCD)
Historical Stock Chart
From Apr 2023 to Apr 2024