Fast food gets its fix as Domino's and McDonald's beat on sales

Marvyn Iheanacho
Metropolitan Police

McDonald's Corp posted its largest rise in sales at same-restaurants worldwide in the past five years, driven by more traffic and successes in its USA initiatives that included promotions on beverages and the launching of its signature crafted sandwiches.

The world's largest burger chain on Tuesday reported a 28 percent jump in second-quarter profit, thanks to sales of its new Signature Crafted line of burgers and $1 drink promotion.

During two recent tests in Dallas and Tulsa, customers surveyed favored the fast-food giant's Quarter Pounder burgers made with 100% fresh beef, which they said was "tastier and juicier", than those made with preservatives-laden frozen beef, McDonald's CEO Steve Easterbrook said on a second-quarter earnings call with analysts on Tuesday, July 25. Same-restaurant sales increased 6.6 percent, which McDonald's estimates are a reflection of increased store and guest counts. It has also been remodeling many of its restaurants.

While those plans may boost sales over the long term, the company is relying on deals like $1 sodas and $2 McCafe drinks to attract customers in the short term.

The majority of its US franchisees approved the advertising funding and will be renovating their restaurants to include new dessert counters and self-order kiosks.

Comparable sales for the International Lead segment increased 6.3% for the quarter, led by continued momentum in the United Kingdom, strong performance in Canada and Germany and positive results across all other markets.

Executives said they need to be careful about not raising menu prices too much.

Bernstein analyst Sara Senatore noted that the company's "impressive" results came even before the full effect of its digital initiatives have been seen. The company is also testing loaded bacon and cheese fries. Globally, it expanded and had more than 37,000 locations. But order accuracy and quality perception scores have improved, he said, adding that he hopes the self-order kiosks and mobile-order and pay app will shave seconds off order times.

For the three months that ended June 30, McDonald's earned $1.4 billion, or $1.70 per share.

Although revenue for McDonald's was down from $12.2 billion in the first six months of 2016 to $11.7 billion for the same period in 2017, the franchising firm's net income increased 19 percent, or a gain from $3.6 billion to $4.3 billion.

Revenue fell 3.4 percent to $6.05 billion, but topped analysts' average estimate of $5.96 billion.

Shares of the company rose more than 2.9 percent in premarket trading.

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