McDonald’s global sales top estimates as affordable meal options boost demand

The logo for McDonald's appears above a trading post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

McDonald’s second-quarter global comparable sales beat Wall Street estimates on Wednesday, as affordable meal bundles and promotions drew in budget-conscious diners looking to stretch their dollars amid economic uncertainty.

Its shares rose 2.3 per cent in early trading as strong demand in the U.S. and international markets powered a 3.8 per cent rise in global same-store sales, above expectations of a 2.4 per cent rise, according to data compiled by LSEG.

Fast-food chains have seen competition heat up as companies such as McDonald’s, Domino’s Pizza DPZ.N and Taco Bell owner Yum Brands YUM.N double down on value meals to counter a slowdown in demand, mainly among the lower-income households.

To improve sales, McDonald’s launched a limited-time Happy Meal offer for kids and adults tied to the “Minecraft” Movie promotion in April. In May, it introduced McCrispy Chicken Strips as a permanent menu item.

These promotions are in addition to the $5 meal deal and the buy-one, add-one for $1 offers launched last year.

CEO Chris Kempczinski said re-engaging the low-income consumer is “critical,” as they typically visit its restaurants more frequently than middle- and high-income groups.

“This bifurcated consumer base is why we remain cautious about the overall near-term health of the U.S. consumer,” he said.

Menu innovation and promotions had also helped Domino’s report upbeat U.S. same-store sales, while weakening demand hurt sales at Yum Brands and Chipotle Mexican Grill CMG.N.

For the second quarter, customer visits to McDonald’s outperformed the wider quick-service restaurant category, data from foot traffic tracking firm Placer.ai showed.

“While rivals like Yum Brands and Chipotle struggled with consumer pullback, McDonald’s played to its strengths by leaning into value, nostalgia and limited-time promotions,” eMarketer analyst Zak Stambor said.

Comparable sales in U.S., McDonald’s biggest market, grew 2.5 per cent, compared with a 0.7 per cent decline a year ago.

Sales in its business segment where restaurants are operated by local partners, jumped 5.6 per cent, led by Japan, while it rose 4 per cent in international markets, on demand recovery in the UK, Canada and France.

Adjusted net income of $3.19 per share exceeded estimates of $3.15.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)