McDonald records 5% revenue increase from higher global sales

USA – McDonald’s Corp has posted a 5% increase in revenue and high profits, surpassing estimates by analysts attributed to higher sales in the overseas markets plus an average consumer spending in the US restaurants.

According to a report by Reuters, its shares by revenue rose by almost 5% helped by higher global same-restaurant sales that beat forecasts as well as strength in mature markets in the United Kingdom and Germany.

While revenue was affected by a move to sell more McDonald’s-owned outlets to franchises to cut costs, net income rose to US$1.38 billion, from US$1.21 billion a year earlier.

Better performance than expected gives credit to its Chief Executive Steve Easterbrook who launched a multi-year turnaround plan in 2015 to appeal to customers, improve technology and refresh its menus.

The program encompassed addition of more high-margin “gourmet” burgers which use fresher and more expensive ingredients together with new value options.

The value price menu was doing well and this has led to demand for McDonald’s items like the Quarter Pounder and the Big Mac, considered as the company’s biggest sellers.

Based on an article by Thomson Reuters, analysts expected 2.7% rise in same-restaurant sales in the US, but in its results, this was way above the estimates standing at 2.9% growth.

Sales were boosted by 5.5% increase at its newly opened stores across the globe, Germany and UK recording high numbers despite severe weather conditions.

“This shows the power of the brand, globally the numbers were outstanding,” said Peter Saleh, an analyst with brokerage BTIG.

“The results were very impressive, actually more impressive than we initially had anticipated.”

McDonald’s is among fast food chains striving for a market share forecast to reach US$223 billion in revenue by 2020.

Statista reported that in 2015, McDonald’s held, by far, the largest market share of the fast food industry while Yum Brands, owner of Taco Bell, KFC, Pizza Hut accounted for 10.8%.

McDonald has a brand value of US$88 billion in 2016, worth more than double its closest competitor, Starbucks and its revenue reached US$24.6 billion.

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