Third-quarter sales rise for McDonald’s

By Aidan Fortune

- Last updated on GMT

McDonald's CEO said the fast-food chain was building momentum in core markets
McDonald's CEO said the fast-food chain was building momentum in core markets

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Promotional strategies have helped global fast food chain McDonald’s to a quarter of sales growth.

In its results for the third quarter, ended 30 September 2017, the restaurant posted a 6% increase in global comparable sales. However, consolidated revenues dropped 10% following a refranchising initiative in Asia.

In the US, third-quarter comparable sales increased 4.1%, driven by value promotions and its premium sandwich platform. Operating income for the quarter increased 6%, reflecting higher sales-driven franchised margin dollars and general and administrative expense (G&A) savings.

Outside the US, continued momentum in the UK​ and Canada helped grow comparable sales for its ‘International Lead’ segment by 5.7% during the quarter.

Momentum for McDonald’s

In the company’s ‘High Growth’ segment, third-quarter comparable sales increased 6.2%, led by a strong performance in China and positive results across the majority of the segment.

Its ‘Foundational’ markets third-quarter comparable sales rose 10.2%.

Steve Easterbrook, McDonald's​ president and chief executive officer, said: “Our positive comparable sales and guest counts across all of our operating segments during the third quarter demonstrate broad-based momentum throughout our business that builds upon our strong first half of 2017.”

The business also hit its refranchising target during the quarter.

“During the quarter, we refranchised our businesses in China and Hong Kong, reaching our target to refranchise 4,000 restaurants more than a year ahead of schedule,” ​said McDonald's chief financial officer Kevin Ozan. “Completing this transaction brings us closer to the customers and communities we serve in these markets and creates a better opportunity to unlock their full growth potential. Our more heavily franchised structure will continue to drive shareholder value by providing a more stable revenue and income stream with higher returns on invested capital.”

Easterbrook added: “Our Velocity Growth Plan is the right strategy for McDonald’s to achieve long-term, profitable growth and we are on track to succeed with our commitment and focus on execution. We’ve made progress in many areas of our business already, including optimising our restaurant ownership mix and running better restaurants. At the same time, we are also making strides with initiatives such as delivery, mobile order and pay, as well as the Experience of the Future transformation of our restaurants that will make the experience more convenient, personalised and enjoyable for our customers.”

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