Promotions lift McDonald's sales in tricky consumer market
Source: AFP
Fast-food giant McDonald's scored solid sales growth Wednesday following promotions to attract struggling consumers, with company shares rising despite profits missing expectations.
The restaurant chain, which unveiled new "Extra Value Meals" in September in the United States, has encountered a "bifurcated" consumer market, according to CEO Chris Kempczinksi.
"We continue to remain cautious about the health of the consumer in the US and our top international markets and believe the pressures will continue well into 2026," Kempczinksi said on a conference call with analysts.
Profits in the third quarter edged up 1 percent to $2.3 billion, while revenues rose 3.0 percent to $7.1 billion.
The company began offering competitively-priced packages in September, with the $8 Big Mac meal including a medium soft drink and medium-sized French fries.
Offerings in November include packages built around sausage and chicken. McDonald's has launched similar efforts in leading overseas markets.
The offerings helped the chain garner a 2.4-percent increase in comparable sales in the United States during the quarter, while global growth was 3.6 percent.
The promotions enhance McDonald's image for providing "reliable value," said Kempczinksi, who pointed to inflation in the price of beef and some other key food items as an ongoing challenge.
"All of this just keeps putting pressure on the industry," he said. "This is an environment where you've just got to grind it out."
To secure support for the promotions from McDonald's franchisees, the company is financing half the cost of promotion, said Chief Financial Officer Ian Borden.
That sum was about $15 million for September. The company expects about $75 million in these costs in the fourth quarter, Borden said.
Shares of McDonald's rose 2.8 percent in afternoon trading.
Source: AFP
