McDonald’s there was reported quarterly earnings and revenue that beat analysts’ expectations as US restaurants turned down same-store sales last quarter.
The earnings report did not mention new E. coli outbreaks in 13 countries that have been linked to McDonald’s Quarter Pounder burgers. CEO Chris Kempczinski is expected to address the situation for the first time in the company’s conference call with investors at 8:30 am ET.
The company’s shares fell more than 2% in premarket trading.
Here’s what the company reported for the period ended September 30, compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $3.23 adjusted vs $3.20 expected
- result: $6.87 billion vs $6.82 billion expected
McDonald’s posted third-quarter net income of $2.26 billion, or $3.13 per share, down from $2.32 billion, or $3.17 per share, a year earlier.
Excluding certain items, the fast food giant earned $3.23 per share.
Net sales rose 3% to $6.87 billion.
However, the chain’s global same-store sales fell 1.5%, a sharper decline than the 0.6% expected by Wall Street, according to StreetAccount estimates, and weighed by the company’s international markets.
U.S. same-store sales rose 0.3%, reversing a decline in same-store sales last quarter but still weaker than the 0.5% rise predicted by StreetAccount estimates. Traffic to U.S. restaurants was slightly negative, but the company credited marketing and the $5 price tag it launched in late June with boosting sales.
Diners have pulled back restaurant spending, leading McDonald’s and competitors to lean toward discounts and other marketing tricks to bring customers back to restaurants. For example, in August, McDonald’s launched a limited-time Collector’s Edition cup.
The company’s two international divisions both reported same-store sales declines compared to the previous quarter. Internationally operated market segments, including France, Germany and Australia, saw same-store sales shrink 2.1%. The international development licensed markets division reported a 3.5% decline in same-store sales, driven by weak demand in the Middle East and China.
Looking ahead to the fourth quarter, it’s unclear how the E. coli outbreak could affect U.S. sales, especially as consumers become more selective about where they spend their money and where.
McDonald’s executives have taken steps to reassure customers that the company’s menu items are safe to eat, including pulling Quarter Pounder burgers from the menu in affected areas until beef patties have been cleared as the culprit. Health authorities have focused on menu item slivered onions as the source of the outbreak, and McDonald’s plans to serve Quarter Pounders without the ingredient in about 900 restaurants after suspending its relationship with its supplier, Taylor Farms.
Still, foot traffic to U.S. locations dropped roughly 10% in the three days following the Centers for Disease Control and Prevention’s announcement last Tuesday of an E. coli outbreak linked to McDonald’s, according to research notes from Research Advisor Gordon Haskett.
This story is evolving. Please check back for updates.
