All-Day Breakfast Boosts McDonald’s Sales

U.S. comparable store sales rose 5.7% in the fourth quarter as McDonald's turnaround strategy gained traction.
Katie Kuehner-HebertJanuary 25, 2016

McDonald’s move to an all-day breakfast and the addition of healthier menu choices is reaping rewards as the company posted its best U.S. quarterly sales in four years.

U.S. comparable store sales rose 5.7% in the fourth quarter and global comparable sales were up 5%, McDonald’s said Monday. Earnings and revenues beat Wall Street expectations, with earnings rising 10% to $1.2 billion and revenues falling 4% to $6.3 billion.

Analysts had expected 2.7% growth in U.S. comparable store sales and 3.2% growth in global sales. The launch of All Day Breakfast in early October was McDonald’s biggest strategic change since it rolled out McCafe beverages nationwide in 2009.

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“We took bold, urgent action in 2015 to reset the business and position McDonald’s to deliver sustained profitable growth,” McDonald’s CEO Steve Easterbrook said in a news release. “We ended the year with momentum, including positive comparable sales across all segments for both the quarter and the year  a testament to the swift changes we made and the early impact of our turnaround efforts.”

McDonald’s shares jumped on the strong quarterly performance, adding 1.2% to $119.77 in trading Monday.

The Wall Street Journal said the fourth-quarter results indicate Easterbrook’s “rebuilding initiatives are gaining traction less than a year after he took the helm.” He has also pared down the menu, provided customers with more transparency about how its food is made, and raised wages for workers at company-owned stores.

Mark Kalinowski, an investment analyst at Nomura, said offering some items from McDonald’s breakfast menu all day and night was the biggest driver of the company’s sales at the end of the year.

“Clearly, All Day Breakfast is helping bring back lapsed customers and may even be bringing in new customers who wouldn’t normally be going to McDonald’s,” he told the New York Times.

Easterbrook cautioned that it will take at least six more months of positive same-store sales growth before the company moves from a turnaround mode to a growth mode. Customer traffic in the U.S. has continued to decline, with “guest counts” dropping 3% last year.