Financial Performance

Promotions Drive McD’s 6% Comp Sales Jump

Deals such as McPick 2 and the Signature Crafted premium sandwich helped the chain post a 4.1% Q3 gain in U.S. same-store sales.
Matthew HellerOctober 24, 2017

McDonald’s reported Tuesday that same-store sales rose 6% in the third quarter as promotions and fresh foods offerings offset any effects from the recent hurricanes.

The third-quarter gain followed a 6.6% jump in the previous quarter — the best in five years — and topped analysts’ expectations of a 4.7% increase. U.S. comparable store sales climbed 4.1%, beating estimates of 3.6%.

McDonald’s attributed the U.S. performance to its national beverage and McPick 2 value promotions, along with the continued success of the Signature Crafted premium sandwich platform.

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“We are serving more customers, more often by offering great tasting food at a good value with the quick service and friendly hospitality they expect from McDonald’s,” CEO Steve Easterbrook said in a news release.

“Our positive comparable sales and guest counts across all of our operating segments during the third quarter demonstrate broad-based momentum throughout our business that builds upon our strong first half of 2017,” he added.

McDonald’s also posted earnings per share for the third quarter of $1.76 and revenue was $5.8 billion, matching estimates. Operating income rose 44%, reflecting a gain of about $850 million on the sale of its businesses in China and Hong Kong.

In trading Tuesday, McDonald’s shares were up nearly 1% at $164.84. “The U.S. comp number is really encouraging, and the key thing is that [this is] even with the impact of hurricanes within the quarter,” Morningstar analyst R.J. Hottovy told CNBC. “The new initiatives they put in place seem to be working.”

The fast-food chain’s national cold beverage value promotion offered soft drinks for $1, and its new Signature Crafted sandwiches were priced at $5 to $7, each. The McPick 2 deal lets customers buy two menu items for $5.

McDonald’s has also introduced healthier menu options and offered burgers stuffed with crispy onions, kale or guacamole as it seeks to adapt to shifting consumer tastes. “Better displays of products like snacks and treats have also boosted sales in categories where McDonald’s has traditionally been lackluster,” GlobalData Retail Managing Director Neil Saunders wrote in a client note.