McDonald’s on Wednesday fell short of Wall Street’s earnings expectations, but the company’s U.S. restaurants reported better-than-expected same-store sales growth.
CEO Chris Kempczinski said in a statement that the results are “a testament to our ability to deliver sustainable growth even in a challenging environment.”
For more than a year, McDonald’s, long considered a bellwether for the financial health of consumers, has been sounding the alarm about a pullback in restaurant spending, particularly from low-income diners. That downturn continued during the third quarter.
“We continue to see a bifurcated consumer base with [quick-service restaurant] traffic from lower income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years,” Kempczinski said on the company’s conference call. “In contrast, QSR traffic growth among higher income consumers remains strong, increasing nearly double digits in the quarter.”
He added that McDonald’s is projecting that the pressure on consumers’ financial health will continue well into 2026.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $3.22 adjusted vs. $3.33 expected
- Revenue: $7.08 billion vs. $7.1 billion expected
The fast-food giant reported third-quarter net income of $2.28 billion, or $3.18 per share, up from $2.26 billion, or $3.13 per share, a year earlier. McDonald’s saw a higher effective tax rate during the quarter, which weighed on its earnings.
Excluding restructuring charges and other items, the burger chain earned $3.22 per share.
Revenue rose 3% to $7.08 billion.
A McDonald’s restaurant is viewed on July 22, 2024 in Burbank, California.
Mario Tama | Getty Images
The company’s same-store sales increased 3.6%, a reversal from the year-ago period’s decline of 1.5% and roughly in line with Wall Street’s expectations, according to StreetAccount.
In the United States, McDonald’s same-store sales increased 2.4%, topping StreetAccount estimates of 1.9%. The company credited growth in average check, suggesting that diners are paying more for their meals despite the ongoing “value wars” between fast-food chains.
In an appeal to budget-conscious consumers, McDonald’s brought back its Snack Wraps for the first time in nine years and priced them at $2.99. CFO Ian Borden said it was one of the most popular chicken launches in recent history in the U.S., with nearly one in five customers purchasing a Snack Wrap.
And in September, the chain reintroduced Extra Value Meals, which it last promoted before the Covid-19 pandemic.
Outside of the U.S., McDonald’s saw even stronger same-store sales growth. Its international operated markets division, which includes Australia and Canada, reported a 4.3% increase in same-store sales.
“The value platforms we’ve had in place for several quarters in our IOM markets are resonating with our customers and continuing to improve value and affordability scores,” Kempczinski said.
And McDonald’s international developmental licensed markets segment saw its same-store sales grow 4.7%, lifted by demand in Japan.
Correction: McDonald’s priced its new Snack Wraps at $2.99. A previous version of this story misstated the price.
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