CHICAGO – Higher menu prices lifted McDonald’s Corp. to better-than-expected results in what has been a challenging second quarter for the quick-service chain.
For the second quarter ended June 30, 2018, growth in average check driven by higher prices lifted the company’s US comparable sales by 2.6 percent. Global comparable sales advanced 4 percent on positive comparable sales in all segments.
But sales at company owned restaurants plunged 27 percent.
Additionally, McDonald’s recently launched a recall of salads from more than 3,000 restaurants in the US after 163 people in 10 states were sickened by Cyclospora bacteria, according to the US Food and Drug Administration (FDA). Three individuals were hospitalized, but no deaths were reported.
“We’re seeing good performance across our business as our customers tell us that they value and appreciate the moves we're making to elevate the McDonald’s experience,” said Steve Easterbrook, president and CEO. “We’re pleased with the results of our international business and the progress we're making in the US on executing on our Velocity Growth Plan priorities. We’ve now marked 12 consecutive quarters of positive comparable sales, and we are confident that we're executing the right strategy to achieve long-term, profitable growth.”
Comparable sales for the International Lead segment increased 4.9 percent for the quarter driven by strong performances in the United Kingdom and France. Operating income for the segment increased 15 percent (or 9 percent in constant currencies), fueled by sales-driven improvements in franchised margin dollars, the company said.
A strong performance in Italy drove results in the High Growth segment, which reported second quarter comparable sales increase of 2.4 percent. Challenges in South Korea partially offset results.
In the Foundational markets, comparable sales in the second quarter climbed 6.8 percent on positive sales performance across all geographic regions.
Net income in the second quarter climbed 7 percent to $1,496.3 million, or $1.90 per diluted share, compared with $1,395.1 million, or $1.70 per diluted share, reported in the year-ago quarter.
Revenues for the quarter retreated 12 percent to $5,353.9 million, compared with $6,049.7 million reported in the second quarter of 2017. McDonald’s attributed the result to the company’s strategic refranchising initiative aimed at reducing the number of company owned stores.
“We remain focused on delivering the most enjoyable experience for every customer, every visit,” Easterbrook said. “Whether that is when they visit a modernized restaurant with inviting hospitality or through the convenience of having delicious food delivered to their home, we know that our fundamental day-to-day commitment to our customers is running great restaurants.”