McDonald’s says appetites remain strong

McDonald's says appetites remain strong

McDonald’s Corp has reported strong sales in the first three months of the year, causing share prices to jump about 5% in morning trade in New York.

Profits increased 13% compared with the first quarter of 2017, hitting almost $1.38bn (£1bn).

International demand, including the UK and Germany, helped to drive the growth, the fast food chain said.

The firm, which had faced tougher competition from new restaurant chains, has been working to win back customers.

It has introduced higher-end burger offerings, renovated restaurants, added more technology and switched to fresher ingredients as part of a turnaround plan that is showing signs of working.

Sales at McDonald’s restaurants opened at least 13 months increased more than 5% in the first three months of the year, and guest counts rose almost 1% – the fifth consecutive quarter of rising customer visits, the firm said.

In the US, sales at such stores increased 2.9% year-on-year during the quarter, though guest counts declined.

In established international markets, such as the UK and Canada, comparable sales rose 7.8%.

“[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.”

Total revenue was $5.1bn, down 9% from the same period last year, a decline the firm said was due to its move to franchise more restaurants, rather than operate them directly.

Operating costs and expenses also fell, reaching about $3bn, compared with $3.6bn in 2017.

McDonald’s said it expected to add a net total of 600 restaurants this year and planned to spend $2.4bn in capital expenditures, including $1.5bn to introduce more technology to its restaurants in the US.

“I’m confident that our strategy and actions we’re taking will position the business for sustained growth,” said chief executive Steve Easterbrook.

McDonald’s owns or franchises more than 37,000 restaurants in 120 countries around the world.

Source: BBC News

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