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McDonald's grew at a blistering pace in the latest quarter, with the world’s biggest restaurant chain reporting its its best global sales rise since 2012 as new delivery partnerships and investment in breakfast are proving to be the right sauce.
Same-store sales climbed 6.5% globally, bolstered by a 5.7% rise in its critical home market. Both gains surpassed analyst estimates compiled by Consensus Metrix.
Key Insights
New breakfast items like donut sticks have helped McDonald’s compete in a hyper-competitive US fast-food market. Discounting has also drawn in diners, with its two-for-$5 deals especially resonating. The positive report comes on the heels of a similarly strong quarter for breakfast rival Starbucks, signalling global consumers are still looking for convenience and value at big-name chains.
McDonald's is investing in delivery to help fuel sales, especially in the US market, and it’s working. This month, it added provider Door Dash to its existing partnership with Uber Eats. Going forward, there’s more room to grow delivery internationally, with the US now pretty well covered.
Still, there are pressures ahead. The burger chain is facing rising labour and commodity costs, which have already resulted in some increased menu prices. International commodity prices will be up 2.5% this year compared to last year because of rising protein costs, the company said on a call, worse than the 2% gain the company had been forecasting heading into the latest quarter.
Market Reaction
The shares rose as much as 2.1% in early trading. They had already risen 21% this year, just outpacing the S&P 500 index.
