McDonald’s reported better-than-expected sales in the second quarter as dining rooms reopened and new chicken sandwiches drove traffic.
Revenue jumped 57% to nearly $5.9 billion in the April-June period. That beat Wall Street’s forecast of $5.6 billion, according to analysts polled by FactSet.
Global same-store sales, or sales at stores open for at least a year, were up 40.5% from the same period a year ago. It was an easy comparison; the second quarter of 2020 was the low point of the pandemic for McDonald’s, when lockdowns shuttered stores and sales fell 30%.
But even compared to 2019, a year before the pandemic hit the United States, same-store sales were 7% higher.
The reopening of dining rooms around the world has moved McDonald’s closer to what would be considered pre-pandemic normal. The UK reopened dining rooms in May, while France and Germany reopened them in June, McDonald’s said. In the United States, 70% of dining halls are now open and the company expects all to be open by Labor Day barring a resurgence of the coronavirus.
“When the markets reopen, customer demand comes back quickly,” chief financial officer Kevin Ozan said on a conference call with investors on Wednesday.
There were still a few hiccups, such as a resurgence of COVID that limited operations at restaurants in southern China.
There has also been a resurgence of infections in parts of the United States, especially in places where more people are hesitant to get vaccinated.
New menu items __ like the Crispy Chicken Sandwich in the US and the McSpicy in Australia and the UK __ boosted sales. A global meal promotion with South Korean pop group BTS __ the latest in a series that also included a meal from rapper Travis Scott __ was also a huge success. CEO Chris Kempczinski said the company is planning more celebrity connections, but also new ways to generate buzz around the brand.
“My challenge to our marketing team here at McDonald’s is to figure out what the next big idea is,” he said.
The company also raised prices 6% from a year ago to offset rising food and labor costs, which also boosted sales.
Attracting workers has been a challenge coming out of the pandemic in the United States as well as in Europe, where border restrictions have limited the supply of workers, Kempczinski said.
Like other national chains, McDonald’s raised wages to attract workers. In May, McDonald’s announced that it would increase wages at its 650 US company-owned stores to $15 an hour by 2024. Including franchise stores, McDonald’s wages rose 5% this year, Kempczinski said.
The company is seeing a growing number of job applications in the United States, particularly in states like Florida and Missouri that ended enhanced unemployment benefits in June, Kempckinsi said. In other states, these benefits end in September.
“I think there’s evidence that as the federal stimulus unfolds, you’ll see an improvement in the application rate,” Kempczinski said.
Because it’s been so hard to find enough workers, the average ordering time has taken an extra 3 seconds, Kempczinski said, but he thinks that’s a short-term issue. The company has actually improved service times by 30 seconds over the past few years.
“Winnings were too hard fought,” Kempczinski said.
The Chicago burger giant posted a net profit of $2.2 billion in the second quarter. Adjusted for one-time items, the company earned $2.37 per share. This was well above the $2.11 that Wall Street had forecast.
Shares of McDonald’s fell 2.5% to $240.07 on Wednesday amid broader and choppy trading in U.S. markets.
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