McDonald’s leans on price hikes to beat sales estimates -Breaking
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© Reuters. FILEPHOTO: This is the logo of McDonald’s Restaurant in Arlington Virginia U.S.A, 27 January 2022. REUTERS/Joshua Roberts(Reuters) – On Thursday, McDonald’s Corp (NYSE) showed that quarterly sales beat expectations. The world’s biggest fast food chain benefited greatly from the price rises in the United States as well as the introduction of a loyalty program.
A tight labor market has led to rising wages and high prices for ingredients like chicken and beef, which caused U.S. restaurants to announce price increases. These have been met with little resistance by consumers.
McDonald’s investment in drive-thru lanes, digital kiosks and delivery has also helped it gain an advantage over other fast-food restaurants, who have had to reduce their hours of operation due to staff shortages.
A loyalty program was launched late last year that allows subscribers to McDonald’s apps to earn points which can be redeemed for fries and burgers. It also drove a 3.5% rise in comparable sales in its largest market, the United States.
According to Refinitiv, IBES, analysts expected a 3.3% increase.
Comparable global sales rose 11.8% which beat estimates of 8.2%. It was aided by COVID-19 restrictions being lifted in some foreign markets.
McDonald’s reported that it had incurred $100M in expenses in its first quarter due to inventory disposal costs resulting from the company’s temporary suspension of operations in Russia, Ukraine.
McDonald’s is one of many Western companies that have entered Russia since the fall of Soviet Union.
Revenues total climbed 11% to $5.67billion surpassing estimates of $5.59billion.
McDonald’s made a profit per share of $2.28, which is 19% more than the year before.
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