McDonald’s Profit Beats Forecasts as US Sales Slip on Fewer Visits
McDonald's earned an adjusted $3.57 a share in the third quarter, topping estimates, even as US same-store sales dipped 0.2% and fewer customers came in.
McDonald’s reported third-quarter profit on Wednesday that came in well ahead of Wall Street forecasts, even as sales at its established US restaurants slipped slightly and fewer Americans visited. The world’s largest burger chain said a renewed push on cheap meals helped its home market improve as the quarter went on, and it plans to roll a new value menu out across the country early next year.
Shares of the Chicago-based company closed more than 6% higher, CNBC reported. 24/7 Wall St. said the rally lifted other restaurant stocks, with Chipotle and Starbucks also gaining.
What happened
Excluding restructuring charges and other items, McDonald’s earned $3.57 a share for the three months ended Sept. 30, up 11% from $3.22 a year earlier, according to the company’s earnings release. Analysts surveyed by LSEG had expected $3.38, CNBC reported. Net income rose 9% to $2.49 billion, or $3.51 a share, from $2.28 billion a year earlier.
Revenue rose 1% to $7.16 billion. That fell short of analyst expectations, which CNBC put at $7.29 billion and other outlets at about $7.28 billion. Systemwide sales, which include sales at restaurants owned by franchisees, grew 4% to more than $38 billion, the company said.
Global same-store sales, which track restaurants open for at least 13 months, rose 1.5%. That was slightly better than the 1.3% analysts expected, according to StreetAccount data cited by CNBC, but well below the 3.6% gain McDonald’s posted in the same quarter last year. The breakdown by region:
- United States: down 0.2%, compared with an expected decline of 0.5%. The company said fewer customer visits were largely offset by bigger average checks.
- International operated markets (which include Germany and Australia): up 1.4%, below forecasts, as gains in most countries were partly offset by weakness in France.
- International developmental licensed markets (where local partners run most restaurants, including Japan and China): up 4.2%, led by Japan, though sales in China declined.
Why it matters
The US decline was McDonald’s first drop in same-store sales at home in six quarters, according to the investment research site TIKR and 24/7 Wall St. It comes as fast-food chains compete hard for lower-income diners who have pulled back on eating out. Even so, 24/7 Wall St. noted that the nearly flat US result compared favorably with a wider slump in fast-food visits during the quarter.
Chris Kempczinski, chief executive of McDonald’s, said in the earnings release that the company was “encouraged by improvement as the quarter progressed following our intervention on value” in the United States. Ian Borden, the company’s chief financial officer, said US same-store sales returned to growth in September after declining in July and August, CNBC reported. Borden later clarified that he was not saying US sales would be better in the fourth quarter.
On the earnings call, Kempczinski said McDonald’s still needed to get “entry-level value right,” calling it the “final piece that’s missing,” according to TIKR. The company had said in August that its US performance was lagging on value offerings, and TIKR reported that management had found only 60% to 65% of US restaurants ran a recommended under-$3 menu in the second quarter.
The value push
During the quarter, McDonald’s focused its marketing on its Extra Value Meals, bundled combo deals, and restarted regional and national promotions in its mobile app, which CNBC said matter most to its most frequent customers. The company is now testing two new value menus: one built around mix-and-match bundles and another offering set combinations of menu items. TIKR reported the tests are running in about 1,900 restaurants. Whichever version proves most popular with customers and franchisees will roll out nationwide in early 2027, CNBC reported.
Abroad, Borden described the consumer environment as soft but said that in most of McDonald’s large international markets, “we’re holding or gaining share,” according to CNBC. He pointed to France as a weak spot, citing a softer economy and short-term disruption from student protests. Franchisees there recently voted on a turnaround plan, CNBC reported.
What comes next
McDonald’s did not issue formal financial guidance with its results. The company raised its quarterly dividend 4% to $1.93 a share. It also recorded $56 million in pretax charges tied to its internal restructuring program, which it calls “Accelerating the Organization.”
The next major test, TIKR noted, will be the company’s outlook for 2027, expected early next year, along with whether the national value menu can bring more US customers back through the door.
