McDonald’s has reported its first earnings increase for seven quarters.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
New products, improved European sales and lower costs all contributed to McDonald’s results, as revenue increased 4% to US$3.86bn, and systemwide sales (including franchisees) rose 1.9% to US$10.43bn. To keep this positive momentum going, McDonald’s must continue to right the wrongs of its past and keep the focus on pleasing customers.
McDonald’s has struggled this past year. Lawsuits, mad cow fears and sluggish sales have all forced the world’s number one fast food outfit to rethink its strategies and reposition itself for growth. This has included addressing the disconnection between local and national marketing campaigns, and also launching a campaign focusing on improving quality, service and
cleanliness to address customer complaints.
These efforts have finally come to some fruition. Q2 earnings grew 13%, meeting management’s expectations and beating Wall Street estimates by a cent a share. The company reported net income of US$497.5m, or 39 cents a share, compared with US$440.9 million, or 34 cents a share, a year ago.
However, the positive results hide a note of caution. Comparable-store sales, from outlets open more than a year, were disappointing, with new stores driving most of the growth. US comparable sales were down 1.6%. All other regions also declined except Europe, which saw a 2.7% increase.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataMcDonald’s will only be able to maintain sales growth at established outlets if it can offer improved menu offerings and better customer service. New products, including a grilled chicken flatbread sandwich, and a toll-free customer comment hotline are all steps in the right direction.
Yet with 13,000 outlets in the US alone, ensuring that elevated service standards are actually being executed poses a challenge. The dip in comparable store sales may well be a reflection of this reality.
The fastfood market will only become more competitive as the top three – McDonald’s, Burger King and Wendy’s – continue to duke it out. Wendy’s and newly independent Burger King have also recently reported positive results.
All are an indication that the fast food market is sure to heat up in the coming months.
Related research: “Social & Market Factors Influencing the US Prepared Foods
Market” (DMCM0069)
(c) 2002 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.
