People wear protective face masks outside McDonald’s in Times Square as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on September 18, 2020 in New York City.
Noam Galai | Getty Images
McDonald’s on Thursday beat Wall Street’s estimates for its quarterly earnings as net sales topped pre-pandemic levels.
On the heels of the strong performance, the fast-food giant raised its outlook for systemwide sales growth.
Shares of the company rose less than 1% in early trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.92 adjusted vs. $1.81 expected
- Revenue: $5.12 billion vs. $5.03 billion expected
The fast-food giant reported fiscal first-quarter net income of $1.54 billion, or $2.05 per share, up from $1.11 billion, or $1.47 per share, a year earlier.
Excluding items, McDonald’s earned $1.92 per share, topping the $1.81 per share expected by analysts surveyed by Refinitiv.
Net sales rose 9% to $5.12 billion, beating expectations of $5.03 billion. Global same-store sales climbed 7.5% in the quarter, surpassing 2019 levels.
Sales growth was driven by the United States, where same-store sales jumped 13.6%. A year earlier, same-store sales were roughly flat after March demand plummeted. McDonald’s U.S. President Joe Erlinger said that the segment had nearly $1.5 billion in digital sales during the first quarter.
Chicken-focused menu items, like the Spicy Chicken McNuggets and Crispy Chicken Sandwich, helped fuel sales this quarter.
“We’re two months past the initial launch of late February, and we still feel really good about the volume and unit movement that we’re seeing,” Erlinger said about the new chicken sandwich.
Next quarter’s U.S. same-store sales are also expected to outpace 2019 levels, in line with the first-quarter performance.
Executives said that company-owned restaurants in the U.S. are better staffed than franchised locations, but the company is considering raising wages and compensation to stay ahead of a labor crunch. Any potential changes would impact a small fraction of McDonald’s labor force, because the company only owns about 5% of its 14,000 U.S. locations. Restaurants across the country are struggling to find workers as more customers return to their dining rooms.
Outside of the U.S., results were mixed. The international operated markets segment, which includes the United Kingdom, Australia and France, reported same-store sales growth of 0.6%. A year ago, its same-store sales fell 6.9% as lockdowns were implemented. This quarter, Covid-19 restrictions weighed on France and Germany, while Canada, the U.K. and Australia saw positive same-store sales growth.
In McDonald’s international developmental licensed markets segment, same-store sales rose 6.4%, fueled by growth in China and Japan. A year ago, same-store sales shrank by 5.3%.
The company raised its systemwide sales outlook for 2021 from growth in the low double digits to the mid-teens.