Customers coming back to McDonald's
July 25, 2017
by Erica Shaffer
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The QSR chain swings to Q2 profit while comparable sales in the United States advance 3.9 percent.
OAK BROOK, Ill. – Better burgers and deals on cold drinks were enough to bring customers back to McDonald’s after years of declining traffic at the QSR chain’s restaurants.
Second quarter comparable sales in the United States climbed 3.9 percent, on a national cold beverage value promotion and the launch of the Signature Crafted premium sandwich line. Meanwhile, global comparable sales advanced 6.6 percent as all segments registered higher guest counts.
|Steve Easterbrook, president and CEO of McDonald's
“We’re building a better McDonald’s and more customers are noticing,” said Steve Easterbrook, president and CEO. “Our relentless commitment to running great restaurants and keeping the customer at the center of everything we do is generating broad-based strength and momentum across our entire business.”
For the second quarter ended June 30, net income for the period was $1,395 million, or $1.70 per diluted share, compared with $1,092.9 million, or $1.25 per diluted share reported in the second quarter a year ago.
Revenues for the period declined 3 percent to $6,049.7 million compared with $6,265.0 million a year ago, reflecting the company’s refranchising initiative. Operating income for the quarter jumped 24 percent to $2,295.1 million from $1,857.9 million.
In the US higher sales-driven franchised margin dollars, G&A savings and higher returns on sales of restaurants lifted operating income for the quarter by 5 percent.
For the six months ended June 30, McDonald’s reported $11,725.6 million in revenues, down 4 percent to $12,168.9 million reported a year ago. Net income for the six months of 2017 was $2,609.9 million, up 18 percent from $2,217.7 million reported in the first six months in 2016.
Comparable sales in the International lead segment climbed 6.3 percent in the second quarter driven by continued momentum in the United Kingdom, strong performance in Canada and Germany and positive results across all other markets, the company said. Operating income in the segment advanced 8 percent (13 percent in constant currencies) on sales-driven improvements in franchised margin dollars.
Second quarter comparable sales increased 7 percent in the High Growth segment on strong performance in China and positive results across the segment. Operating income increased 28 percent primarily on from lower depreciation expense due to the pending sale of the China and Hong Kong businesses.
The Foundational Markets and Corporate segment reported a 13 percent increase in second quarter comparable sales. Operating income also increased significantly on a very strong performance by Japan and strong results across the segment’s other regions. McDonald’s said the segment also benefited from comparison to the prior year’s strategic charges.
“Whilst we’re encouraged by our results from the first half of 2017, we’re not complacent, Easterbrook said. “Today, we’re acting like a leadership brand, taking on new challenges and opportunities and moving with a greater sense of purpose and urgency. We’re building on our momentum, leveraging our size and scale and executing with greater precision against our priorities to retain, regain and convert customers by giving them even more reasons to visit and enjoy McDonald’s. I’m confident that we’re on the right path to continue positively impacting sales, guest traffic and customer satisfaction as we work to bring the biggest benefit to the most people in the shortest possible time.”