McDonald's third-quarter earnings topped expectations, but revenue fell short of estimates and traffic to its U.S. restaurants declined. U.S. same-store sales slipped 0.2%, though that beat Wall Street's forecast. The company is testing two new value menus ahead of a U.S. rollout in early 2027.
McDonald's reported mixed quarterly results on Wednesday as traffic to its U.S. restaurants fell, leading to a slight decline in domestic sales at established locations. Shares rose more than 2% in premarket trading.
Adjusted earnings per share came in at $3.57 versus $3.38 expected, based on an LSEG survey of analysts. Revenue, however, was $7.16 billion versus $7.29 billion expected. Third-quarter net income was $2.49 billion, or $3.51 per share, up from $2.28 billion, or $3.18 per share, a year earlier.
U.S. same-store sales decline 0.2%
The company reported a 0.2% decrease in sales at U.S. restaurants open at least 13 months. That performed better than the 0.5% decline Wall Street anticipated, according to a StreetAccount survey of analysts.
CEO Chris Kempczinski said in a statement: "we’re encouraged by improvement as the quarter progressed", following the company's intervention on value. CFO Ian Borden said on the earnings call that same-store sales returned to growth in September after falling in July and August. However, he clarified that he did not say U.S. same-store sales would be better in the fourth quarter.
New value menus head for testing
Kempczinski said in August that the U.S. business was falling short on execution, particularly on its value offerings. McDonald's has leaned into discounts to attract budget-conscious diners over the last two years, like many restaurants.
To reverse the declines, the company focused its marketing on Extra Value Meals and restarted regional and national promotions on its mobile app. It is also testing two new value menus, one with mix and match bundles and the other with set combinations of menu items. The offering that resonates most with customers and franchisees will roll out across the U.S. in early 2027, executives said.
International markets lift results
Overall, same-store sales rose 1.5%, lifted by international segments, topping analysts' expectations of a 1.3% increase. The international developmental licensed markets business, which includes Japan and China, grew same-store sales 4.2% against a forecast of 2.1%. The international operated division, which includes Australia and Germany, rose 1.4% and underperformed the 2.1% analysts projected.
France was a weak spot, McDonald's said, as franchisees there recently voted on a strategy to turn the business around.
Source: CNBC
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