McDonald’s announced on Wednesday (August 6) that its second quarter financial report exceeded Wall Street’s expectations, as the company’s cost-effective meals and promotional activities attracted budget-conscious consumers amid increasing economic uncertainties.
According to the financial records, the global fast-food giant reported a net income of $2.25 billion and earnings per share of $3.14 for the second quarter, surpassing last year’s net income of $2.02 billion and earnings per share of $2.80 for the same period.
Excluding restructuring costs and other items, McDonald’s earnings per share were $3.19.
The company’s revenue grew by 5% to $6.84 billion. Comparable sales (tracking performance at restaurants open for at least a year) increased by 3.8%, exceeding the expected 2.4% growth, marking the largest increase for the chain in nearly two years.
Comparable sales at McDonald’s U.S. restaurants grew by 2.5%, reversing two consecutive quarters of declining domestic sales. Chris Kempczinski, CEO of McDonald’s, stated that the hamburger chain exceeded its competitors in both comparable sales and foot traffic.
Kempczinski noted that McDonald’s pricing strategy, marketing initiatives, and new menu items collectively drove the company’s sales growth in the second quarter.
With major fast-food chains all ramping up the introduction of value meals to address slowing demand, particularly from low-income households, competition in the fast-food industry is intensifying.
To boost sales, McDonald’s collaborated with the popular sandbox video game “Minecraft” in April to introduce a limited-time Happy Meal for both children and adults. In May, the company also launched McCrispy Chicken Strips as a permanent menu item.
Furthermore, the Snack Wrap made a strong comeback last month at McDonald’s U.S. locations. Early data indicate that from July 10 to July 12, the first three days after the new Snack Wrap was introduced, daily foot traffic at McDonald’s U.S. stores increased by double digits compared to the average daily levels so far this year, leading to a significant boost in comparable sales at these locations in a short period.
These promotional activities were built upon last year’s $5 value meals and the “buy-one, add-one for $1” promotions.
Kempczinski emphasized that re-engaging low-income consumers is “crucial” as they tend to visit McDonald’s restaurants more frequently than the middle to high-income groups.
On Wednesday, McDonald’s stock price rose by 2.3% in early trading on Wall Street.