McDonald's modernization efforts boosted 1Q sales

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Efforts to modernize its menu and its restaurants drove healthy gains in same-store sales and profit in the first quarter

McDonald’s Corp. said its ongoing efforts to modernize its menu and its restaurants, with a little help from an extra operating day and favorable weather, drove healthy gains in same-store sales and profit in the first quarter.

For the March 31-ended period, McDonald’s net income rose 5 percent to $1.27 billion, or $1.23 per share, compared with $1.21 billion, or $1.15 per share, a year earlier.

Revenue increased 7 percent to $6.55 billion in the first quarter compared with $6.11 billion a year earlier, reflecting a 7.3-percent rise in global same-store sales.

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Same-store sales increased 8.9 percent in the United States, which McDonald’s attributed to sales of core menu items, the Chicken McBites limited-time offer, sales lifts at reimaged locations and favorable weather. During the quarter, the chain also began advertising the Extra Value Menu, a new grouping of items whose prices sit between the Dollar Menu and Extra Value Meals.

Unfavorable weather and ongoing economic challenges from austerity measures negatively affected same-store sales in Europe, which rose 5 percent in the first quarter, McDonald’s said. As in previous quarters, sales in France and Germany contributed to the continent’s results, and McDonald’s noted strong performances in the United Kingdom and Russia, the latter of which would experience its first franchise growth push, the brand previously announced.

First-quarter same-store sales rose 5.5 percent in McDonald’s Asia/Pacific, Middle East and Africa, or APMEA division. Broad-based growth in Australia, China and Japan drove APMEA’s results, McDonald’s said.

“The ongoing strength of McDonald’s results, amid persistent economic headwinds, is a testament to our customer-focused plans and our proven business model,” said chief executive Jim Skinner, who will retire June 30 and will be succeeded by president Don Thompson. “We remain committed to the global priorities that are most impactful to our customers: evolving our menu, modernizing the customer experience and broadening accessibility to our brand.”

He added that global same-store sales are expected to increase about 4 percent for the month of April.

Oak Brook, Ill.-based McDonald’s Corp. owns or operates more than 33,000 restaurants in 119 countries, including more than 14,000 locations in the United States.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN