McDonald’s (MCD) on Thursday posted its first-quarter 2022 earnings results before market open that slightly beat Wall Street’s expectations, boosted by strong digital sales, menu price increases and marketing promotions that used its core menu items.
Here’s what the Golden Arches reported, compared to Wall Street estimates, according to a Bloomberg consensus estimates:
Revenue: $5.67 billion versus $5.57 billion expected
Adj. earnings per share (EPS): $2.28 versus $2.17 expected
U.S. same-store sales: 3.5% versus 3.59% expected
Global same-store sales (IOM) : 20.4% versus 15.63% expected
Digital sales — which includes mobile app and delivery and kiosk sales — benefitted from the prior-year launch of the app-driven MyMcDonald’s Rewards program to exceed $5 billion dollars, or over 30% of total systemwide sales in McDonald’s top six markets. This spike in digital sales was up 60% compared to a year ago.
To boost sales during the pandemic, the restaurant chain heavily invested in this growth strategy, including the three ‘D’s:’ digital, delivery and drive-thru via its “Restaurant Experience of the Future” campaign, which features the kiosks, in-app ordering, and table service.
The war in Ukraine and international markets
During the past quarter, which ended March 31, 2022, the Chicago-based company faced the impact of the Omicron and the war in Ukraine.
In the release, the company acknowledged the temporary suspension of operations and closing of restaurants at the end of February in Ukraine and mid-march in Russia. In these markets, the company incurred pre-tax operating expenses of $127 million dollars, or $0.13 per a share, in the first-quarter.
Of that amount, $27 million was used in order to provide employee salaries, lease and supplier payments, while $100 million dollars accounted for inventory in McDonald’s supply chain that likely will be disposed from these temporary closures.
In a statement, McDonald’s President and Chief Executive Officer, Chris Kempczinski, said despite “an increasingly complex and uncertain operating environment … the Arches have shone brightly.”
McDonald’s international operated markets saw same-store sales jump 20.4% led by sales in France and the U.K. as COVID-related government restrictions ease in most markets.
In international developmental license markets, McDonald’s saw strong sales led by Japan and Brazil. However, strong growth was offset by a decline in sales in China due to a resurgence of COVID-19 cases and government restrictions.
Menu ‘hacks’
This past quarter, McDonald’s launched creative marketing efforts that required little to no menu changes or additions. In January, the company unveiled ‘menu hacks’ that provided customers with a four ‘hacked’ menu items, including the Hash Brown McMuffin, a Crunchy Double, a Surf + Turf, and a Land, Air & Sea, all of which are made with menu items that were already available.
In an effort to get customers to use McDonald’s app and McDelivery, the company offered a free medium world famous fries and soft drink with any a Surf + Turf order, in addition to other digital-only promotions.
In a release, McDonald’s noted these type of promotions drove “top line growth” by using its core menu and listening to its customer base.
“We’re building customer affinity by identifying relatable fan truths and turning them into remarkable cultural moments” including its Menu Hacks promotion and Super Bowl commercial in the U.S, the company noted.
Shares of McDonald’s are up nearly 7% compared to a year ago.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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Source: https://finance.yahoo.com/news/mc-donalds-earnings-223610149.html