Updated menu, celeb collaborations, pump McDonald’s sales

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FILE – This Oct. 17, 2019 file photo shows a McDonald’s sign along Interstate 40/85 in Burlington, N.C. McDonald’s sales improved throughout the second quarter, Tuesday, July 28, 2020, as markets reopened globally, but the fast food giant still faces a bumpy recovery. (AP Photo/Gerry Broome, File)

McDonald’s U.S. sales roared back in the third quarter with new menu items and attention-grabbing celebrity collaborations.

And the burger giant says more is coming. In a virtual meeting for investors Monday, McDonald’s said a much-anticipated chicken sandwich with pickles — an answer to competitors like Popeye’s and Chick-fil-A — will go on sale in the U.S. early next year. And the company is also developing its own plant-based burger, McPlant, which it will begin testing next year.

Share of plant-based burger maker Beyond Meat plummeted 8% on that news. McDonald’s tested Beyond Meat patties at Canadian restaurants earlier this year, but ended the trial in April.

With new choices like spicy chicken nuggets and a meal deal promotions with rapper Travis Scott, McDonald’s exceeded most projections for the third quarter.

It wasn’t the same story outside of the U.S., where sales between July and September failed to match last year’s levels, and McDonald’s warned that a resurgence of coronavirus cases in key markets like France, Germany and the United Kingdom could force dining room closures and other restrictions.

“We’re pleased with our recovery to date, but we also understand there inevitably will be more starts and stops with the virus resurgences,” McDonald’s Chief Financial Officer Kevin Ozan said Monday in a conference call with investors.

Infections in the U.S. have now begun to surge as well. But 95% of U.S. McDonald’s have drive-thru windows, which has allowed restaurants to continue to operate even though less than 20% have opened their dining rooms. Globally, only 65% of McDonald’s have drive-thru windows.

Johns Hopkins University’s coronavirus tracker reported more than 50.2 million COVID-19 cases globally as of Sunday. The U.S., with about 4% of the world’s population, represents almost a fifth of all reported cases.

McDonald’s same-store sales — or sales at locations open at least a year — jumped 4.6% in the U.S. Customer traffic fell, but when diners came, they spent more on larger group orders. Dinner was particularly strong, McDonald’s said, but other times of day were elevated as well.

The meal promotion with Scott, introduced in September, was the first time McDonald’s featured a celebrity’s name on its menu since a Michael Jordan-branded meal deal in 1992. For $6, customers could order Scott’s favorite meal: a Quarter Pounder, fries and a Sprite. Scott’s Cactus Jack brand also designed clothes for McDonald’s employees.

Ozan said there will be more celebrity tie-ups to come. Last month, McDonald’s introduced a limited-time meal collaboration with Colombian singer J Balvin.

McDonald’s also got a lift from the September introduction of spicy McNuggets. It was the first time the company had introduced a new style since McNuggets debuted in 1983.

In December, McDonald’s plans to bring back the McRib sandwich for a limited time. It’s the first time in eight years that the McRib will be on U.S. menus.

Globally, McDonald’s same-store sales fell 2.2% in the third quarter, with sales increases in Japan and Australia offset by declines in China, Europe and Latin America. Still, that was significantly better than the 24% drop the company saw in the second quarter.

Third quarter net income rose 10% to $1.8 billion. Earnings, adjusted for one-time items, were $2.22 per share.

That surpassed Wall Street’s expectations of $1.91 per share, according to analysts polled by FactSet.

Revenue fell 2% to $5.4 billion. That was in line with expectations.

Shares of the Chicago company slipped nearly 2% in midday trading.

Categories: US & World News