McDonald's beats profit estimates on U.S. drive-thru demand

(Reuters) – McDonald’s Corp MCD.N beat third-quarter revenue and profit estimates on Monday, as customers in the United States ordered more hamburgers and fries in drive-thru outlets and on delivery apps to avoid dining out during the COVID-19 pandemic.

FILE PHOTO: The logo of a McDonald’s Corp restaurant is seen in Los Angeles, California, U.S. October 24, 2017. REUTERS/Lucy Nicholson

The company’s limited-time promotional deal with rapper Travis Scott, which caused shortages of some ingredients, and other marketing investments also helped sales bounce back from pandemic lows, sending its shares over 6% higher amid broader market gains.

McDonald’s holds its virtual investor update later on Monday. Investors will be watching to see how McDonald’s will be able to boost sales next year, including the possibility of more celebrity collaborations, wrote Cowen analyst Andrew Charles in a note last week.

“We believe 2021 and beyond U.S. sales drivers will focus on making the brand more youthful via store remodels that are nearly complete, new menu/marketing opportunities and utilizing

2019’s tech acquisitions,” he said.

Overall, global sales fell 2.2%, an improvement over the previous quarter’s drop, as McDonald’s had already announced in an October update.

Despite some recovery, the world’s largest burger chain is still being pressured in key markets outside the United States, including France, Germany and the United Kingdom by new lockdown restrictions due to a spike in coronavirus cases.

Even before the new restrictions, McDonald’s overseas sales recovery had been sluggish compared to the United States, where its huge number of drive-thru lanes gave it an edge over rivals for customers looking for restaurant food without the risks of dining out.

Nearly 95% of McDonald’s 14,000 U.S. restaurants have a drive-thru.

McDonald’s total revenue fell about 2% to $5.42 billion in the three months ended Sept. 30, largely recovering from the over 30% plunge posted in the second quarter.

Analysts on average had estimated revenue of $5.40 billion, according to IBES data from Refinitiv.

U.S. customer traffic still remained down from a year earlier, the company said.

Net income surged 10% to $1.76 billion, helped by gains from the sale of a part of McDonald’s stake in its Japanese affiliate.

Excluding those gains, the company earned $2.22 per share, beating estimates of $1.90.

Source: Read Full Article