McDonald’s reported a stronger-than-expected third quarter, with sales significantly boosted by its popular Snack Wraps.
Global same-store sales, for locations open at least a year, climbed 3.6 per cent from July to September, slightly surpassing Wall Street’s 3.5 per cent forecast.
US same-store sales increased 2.4 per cent. The reintroduction of Snack Wraps to American menus in July, after a nine-year absence, proved impactful.
Placer.ai data showed a 15 per cent surge in US store traffic on their release day. The company also launched Extra Value Meals in the US in early September, aiming to attract customers deterred by high fast-food prices.
This included an $8 Big Mac meal or a $5 Sausage McMuffin meal for a limited time in most of the country.
However, Placer.ai noted these value meals did not boost traffic as significantly as a 50-cent double cheeseburger offer on 18 September, celebrating National Cheeseburger Day.
Third quarter revenue rose 3 per cent to $7.08 billion, the Chicago company said Wednesday. That was in line with Wall Street’s expectations.
The company’s net income rose 1 per cent to $2.28 billion. Adjusted for one-time items, including $39 million in restructuring charges, McDonald’s earned $3.22 per share. That was lower than the $3.33 analysts forecast.
McDonald’s shares were flat in premarket trading on Wednesday.
McDonald’s increased spending on deals and marketing in the third quarter were likely on reason for the earnings miss.
But customers’ perception of value is becoming increasingly critical as customers worried about the economy visit restaurants less frequently.
Higher-priced fast casual chains Cava and Chipotle both reported weaker-than-expected results in the third quarter, saying younger consumers were pulling back on spending.
But value-oriented Taco Bell bucked that trend. Taco Bell parent Yum Brands said Tuesday that Taco Bell’s same-store sales rose 7 per cent in the third quarter, driven by value items like its $3 Grilled Steak Burrito.
“We’re not seeing consumer pullback in the Taco Bell business. We do think the consumer in the U.S. is cautious but incredibly resilient,” Yum Brands CEO Chris Turner said.
Turner said the brand saw more younger consumers and more families coming in to its stores in the third quarter.
