McDonald's Q3 sales rise in the back of cheaper menu, new launches

McDonald's Q3 results: Fast-food chain McDonald's beat Wall Street estimates for third-quarter profit and sales on Monday, powered by new launches as well as steady demand for its cheaper burgers and fries from diners struggling with still-high food prices.

In pre-market trading, shares of McDonald's rose about 2 per cent to $261 as it also raised its quarterly cash dividend by 10 per cent.

McDonald's has been able to keep its meals relatively more affordable following the industry-wide hike in prices last year, helping counter the trend of inflation-hit consumers opting to eat more at home and a decline in footfall.

Global comparable sales at the company jumped 8.8 per cent in the quarter ended September 30, while analysts on average expected a 7.36 per cent rise, Reuters reported quoting LSEG data.

Drawing on its history of menu enhancements, the burger giant launched the Cheesy Jalapeno Bacon quarter pounder in July and brought back the fan-favorite Spicy Chicken McNuggets to menus in September.

According to UBS analysts, both items likely drove solid sales growth in the third quarter. Data from Placer.ai showed that while overall dining traffic fell in all three months of the quarter, McDonald's saw a 7.3 per cent jump in July.

Footfall strength at the company tapered off in the next two months - recording declines of 1.1 per cent and 3.7 per cent - but remained ahead of the broader industry trends.

Comparable sales in the United States climbed 8.1 per cent in the quarter, beating estimates of a 7.4 per cent increase, thanks also to higher average spending at stores.

Meanwhile, same-store sales in McDonald's internationally operated markets increased 8.3 per cent, edging past expectations for 8.03 per cent growth.

Total quarterly revenue increased 14 per cent to $6.69 billion, beating estimates of $6.58 billion.

Net income rose to $2.32 billion, or $3.17 per share, from $1.98 billion, or $2.68 per share, a year earlier.

On an adjusted basis, McDonald's posted a per-share profit of $3.19, handily beating estimates of $3.00.

(With Reuters inputs.)