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McDonald’s surpasses Wall Street’s sales expectations again

Anne Riley Moffat
Bloomberg

McDonald’s Corp. reported better-than-expected results for the third quarter as the global pandemic continued to give restaurants with robust drive-thru and delivery footprints a lift. The shares rose.

The chain posted revenue of $5.42 billion, surpassing analysts’ expectations for the fourth straight quarter. Adjusted earnings per share of $2.22 also beat estimates. The burger chain had previously reported same-store sales for the quarter, including 4.6% growth in the U.S. that wasn’t enough to offset weakness abroad. Globally, same-store sales dropped 2.2%.

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The stronger-than-forecast results come as customers craving comfort food and touchless experiences increasingly turn to fast food. The burger giant had already been revamping digital options before the virus hit, including touchscreen ordering and increased delivery options, allowing it to maintain sales even when eat-in dining rooms were temporarily closed earlier this year in parts of the U.S. and beyond.

McDonald’s shares rose as much as 5.2% in New York, the most intraday in more than six months. The company on Monday also laid out a new growth strategy to investors.

Still, challenges remain. McDonald’s said several of its key markets have reintroduced restrictions on in-person dining, from reduced hours to dining-room closures, including France, Germany, Canada and the U.K. In the quarter ended Sept. 30, the Chicago-based company had already reported negative same-store sales in Latin America, China and several key European markets.

“We’re pleased with our recovery to date. We also understand there inevitably will be more starts and stops with virus resurgence since we’re already seeing this in many markets in all parts of the world,” Chief Financial Officer Kevin Ozan said on the company’s earnings call.

Things are stronger in McDonald’s home market. A brisk drive-thru business in the U.S. and limited-edition celebrity meals featuring Travis Scott and J Balvin helped the U.S. return to growth. Spicy chicken nuggets – a short-term menu item that drew buzz – also brought in customers. Still, U.S. comparable guest counts remained negative for the quarter, meaning fewer customers placed orders – they just spent more whenever they did.

In October, after the third quarter ended, McDonald’s saw mid-single digit comparable sales growth in the U.S., Ozan said, with expansion at breakfast, lunch and dinner. Same-store sales in its International Operated Markets unit, which includes regions like Europe and Australia, remained in the negative low-single digits, he said.