McDonald’s is bouncing back, reporting quarterly earnings and revenue in Q2 that topped analysts’ expectations, reported CNBC. The QSR reported $6.84 billion in revenue, a 5% increase, surpassing the $6.7 billion expected for the quarter.
“[CEO Chris] Kempczinski in the company’s earnings release credited the chain’s value, marketing and new menu items for the 6% increase in system sales during the quarter. Same-store sales, a metric that only tracks the performance of restaurants that have been open at least a year, increased 3.8%, the chain’s biggest jump in nearly two years,” wrote the outlet.
Despite the surprising success last quarter, executives said they were having conversations with franchisee owners, who set the prices at their own stores, to try to find ways to offer consumers more low-priced meals and deal offerings, reported the New York Times.
“Too often, if you’re that consumer, you’re driving up to the restaurant and you’re seeing combo meals could be priced over $10, and that absolutely is shaping value perceptions,” Kempczinski told Wall Street analysts and investors on a call Wednesday. He noted that some consumers had a negative view of pricing, adding, “We’ve got to get that fixed.”
“Indeed, it was the $5 meal deals and return of snack wraps, priced at $2.99, this summer that propelled McDonald’s sales higher in its latest quarter,” wrote NYT.
“Re-engaging the low-income consumer is critical,” Kempczinski said during the call. New deals and promotions have helped McDonald’s, he said, but he remains cautious given how many of the Golden Arches’ sales come from lower-income consumers.
On Wednesday, McDonald’s said that while lower-income consumers are getting fast food less often, higher- and middle-income consumers are coming more, a trend the company sees continuing, reported the Wall Street Journal.
“The Chicago-based company continues to expect to open roughly 2,200 restaurants this year, and said tariffs will slightly weigh on profits in company-owned restaurants this year,” WSJ reported.
In May, McDonald’s said it plans to launch a beverage test in the United States later this year at some of its existing restaurants, incorporating menu items inspired by its beverage-focused store concept CosMc’s.
The company continues to test, learn and position itself for growth in the beverage space, said Kempczinski.