McDonald’s Stock Surges as New Menu Brings Back Customers in Most Major Markets

April 30, 2018, 1:53 PM UTC

McDonald’s (MCD) return to form shows no signs of losing steam.

The world’s largest fast-food chain on Monday reported strong growth in every major market, from France to Russia to the U.S. as efforts to renew its menu brought back customers in great numbers, sending its shares up 4% in early trading.

In the United States, McDonald’s biggest market, sales at restaurants open at least 13 months rose 2.9%, thanks to higher prices and better sales of its higher-ticket items. In what McDonald’s calls its “lead” markets abroad, namely Australia, Canada, France, Germany, and the U.K., they rose 7.8% in international lead markets. The company blew past estimates on both counts. Globally, same-store sales were up 5.5%, better than analyst expectations for 3.9%.

“More customers are recognizing that we are becoming a better McDonald’s,” McDonald’s CEO Steve Easterbrook said in a statement.

Since he took the reins in 2015, Easterbrook has worked to speed up McDonald’s metabolism, innovate its menu and tech more quickly, and change the hamburger chain’s image. On his watch, McDonald’s has now seen 11 straight quarters of positive comparable sales and, more crucially, five consecutive quarters of high customer traffic.

McDonald’s more recent menu tweaks have included fresh beef in its quarter pounders, something coming to more stores next month, as well as having at least half of its Happy Meals have fewer than 600 calories by 2022.

Same-store sales weren’t the only things to rise in the first quarter: McDonald’s net income rose to $1.38 billion, or $1.72 per share, from $1.21 billion, or $1.47 per share, a year earlier. Total revenue fell 9% to $5.14 billion, but still beat the estimate of $4.98 billion. That decrease stems from McDonald’s selling more of its stores to franchisees. GlobalData Retail’s Neil Saunders called that approach “prudent” in a research note on Monday, saying it “reduced operating expenses and incurs lower capital costs.”

Read More

Great ResignationInflationSupply ChainsLeadership