Net income in the third quarter ended Sept. 30 totaled $1,883.7 million, equal to $2.32 per share on the common stock, up 48 percent from $1,275.4 million, or $1.50 per share, in the year-ago period. Revenues of $5,754.6 million were down 10 percent from $6,424.1 million. The decline was due to the impact of the company’s refranchising initiative.
Global comparable sales increased 6 percent, reflecting higher guest counts across all segments. In the United States, comparable sales increased 4.1 percent in the quarter, driven by value promotions and a new premium sandwich platform, saidChristopher J. Kempczinski, president of McDonald’s USA.
|Christopher Kempczinksi, president of McDonald's USA|
“First, we offered compelling, consistent value programs across a number of tactics that clearly resonated with our customers,” Kempczinski said during a conference call with investment analysts. “We continued our $1 any size soft drinks program and supplemented it with the return of McPick 2 for $5 that offered some exciting food deals. We're also starting to get real traction with the targeted mobile offers via our app that are tailored to customers' unique buying preferences.
“Second, we've been able to capitalize on this increased traffic in our restaurants with menu news that drove customers to trade up to premium, higher-margin products. In Q2, we launched our Signature Crafted sandwich line available either in beef or chicken with three flavor combinations, pico guacamole, sweet barbecue bacon and maple bacon dijon.”
“This meant a new, or modern look to the McCafé brand and new choices, including the reintroduction of our McCafé espresso line after a significant equipment upgrade across our system,” Kempczinski said. “The McCafé espresso products performed very well, reaffirming our system’s confidence that McCafé can be a significant growth platform for us in the future.
“As we’ve seen with both Signature Crafted and McCafé, when we improve the taste and quality of our products to meet customers’ rising expectations, they reward us with more business.”
“We’re learning a lot about delivery and seeing particular success in dense urban metros with high penetration of younger customers like New York, Boston, Miami and Los Angeles,” Kempczinski said. “I truly believe we’re just beginning to scratch the surface on this opportunity.”
Looking ahead, McDonald’s plans to launch a national value platform strategy early next year.
“And so what you’re going to see from us next year is us being really fully competitive with our nearing competitors with the value program there … our value program is going to be focused on $1, $2 and $3 price points for an everyday value piece of it. And then there will also be deals that we’ll pulse in and out throughout the year as a result of that.
“When you talk about the investment that is being asked of owner/operators, one of the things that we talked about is that this plan has to be looked at holistically. And so while there is an investment that’s being made on the value side, there are also some significant efficiencies that are being captured on the other side around, particularly, marketing and efficiencies that we’re getting there, efficiencies that we’re getting at the restaurant level. And so when you look at all of it on a blended basis, we think that this is a balanced plan.”
“Overall, positive same store sales is a credit positive, and we believe operating performance will benefit from the company’s various initiatives that place greater emphasis on addressing the requirements of its core customers and recapturing lost visits as well as enticing casual visitors to become more engaged with the brand,” Fahy said. “However, earnings growth could be challenging as intense competition from both traditional and non-traditional food providers increase, labor cost pressures grow and challenging economic conditions around the world persist.”