Cheap drinks help McDonald’s buck restaurant gloom

Listen to this article

00:00
00:00

More burger sizes, $1 soft drinks and $2 McCafes helped McDonald’s smash market expectations for its sales and earnings growth for the first quarter.

The world’s biggest burger chain said on Tuesday that global like-for-like sales rose by 4 per cent in the first three months of the year, handily beating Wall Street estimates for a 1.1 per cent rise.

Shares in the company, which hit an all time high of $134.76 on Monday, jumped 2.5 per cent in pre-market trading.

In the US, the company’s biggest market, the Golden Arches notched a 1.7 per cent gain in the closely-watched gauge, confounding expectations for a 0.8 per cent drop.

The aggressive price promotions implemented by chief executive Steve Easterbrook helped McDonald’s buck the wider gloom in the US restaurant industry, where many have struggled to adapt to changing consumer tastes and cut throat competition.

“There’s a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers,” said Mr Easterbrook.

Since taking over in early 2015, Mr Easterbrook has moved to reverse McDonald’s sales decline by revamping the chain’s menu and drive traffic with the introduction of the all-day breakfast, which has given consumers a cheaper option for lunch and dinner.

Tuesday’s result suggest that McDonald’s recovery remains on track. Revenue for the quarter came in at $5.68bn, topping analysts’ estimates for $5.53bn. Net income rose 8 per cent to $1.21bn, or $1.47 per share, also ahead of expectations of $1.33 per share.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.