McDonald’s (MCD) first quarter earnings beat expectations as more consumers sought out value amid\u00a0a challenging economic backdrop.<\/p>\n
McDonald\u2019s posted global same-store sales growth of 3.8%, slightly below expectations, per Bloomberg consensus data. US same-store sales grew for the fourth quarter in a row, at 3.9%, as higher check sizes drove sales, but US sales slowed from a 7% jump in the previous quarter.<\/p>\n
Adjusted earnings per share of $2.83 beat Wall Street\u2019s forecasts for $2.75. Revenue grew 9% year over year to $6.52 billion, slightly above the $6.46 billion the Street expected.<\/p>\n
\u201cConsumers, low-income consumers in particular, are under pressure, and that’s why we want to just continue working so hard to make sure we\u2019re delivering that great value for money,\u201d McDonald\u2019s CFO Ian Borden told Yahoo Finance.<\/p>\n
McDonald\u2019s stock rose 1% on Thursday following the results. It has underperformed the S&P 500 (^GSPC) year to date.<\/p>\n
You might have seen the viral video of McDonald\u2019s CEO Chris Kempczinski trying the new Big Arch burger, which launched in March. While Kempczinski\u2019s taste test prompted some mocking from fast food peers, it also likely got more consumers to head to the fast food joint.<\/p>\n
\u201cResults from the Big Arch burger (March) were pretty good,\u201d BTIG analyst Peter Saleh wrote in a note. \u201cSales did jump after Chris Kempczinski\u2019s tasting video went viral (say what you will about his small bite and corporate-speak, he sold burgers), but have since waned and will roll off the menu soon.\u201d<\/p>\n
When it comes to winning back low-income consumers, value has been the name of the game for the fast food giant. In early April, McDonald\u2019s launched a new under-$3 menu and a $4 breakfast meal deal, in addition to its ongoing $5 to $6 meal deals.<\/p>\n
Borden said the early results from the $3 menu, which replaced McDonald\u2019s buy-one, get-one promotion, \u201care encouraging,\u201d as consumers have a \u201climited amount of money in their pocket.\u201d<\/p>\n
While US growth was up yet again, international markets saw similar momentum, with international-operated markets and international developmental markets up 3.9% and 3.4%, respectively.<\/p>\n
Borden said McDonald\u2019s has been working with its supply partners to navigate higher prices for commodities like beef and packaging, which make the company\u2019s affordability push more challenging.<\/p>\n
\u201cThere continues to be pressure on a commodity like beef,\u201d Borden said. \u201cThe good thing you would have heard on our call this morning, we reiterated our expectations on food and paper inflation for the year in the US in the low to mid single digit range.\u201d<\/p>\n<\/p><\/div>\n
Wall Street and McDonald\u2019s rivals are also watching how new beverage sales perform. In late April, the burger giant announced six specialty drinks, including refreshers and \u201cdirty sodas,\u201d or customizable sodas mixed with creamer and flavored syrups. Saleh believes the new drinks could drive a mid-single-digit sales lift in the current quarter.<\/p>\n
\u201cWe’re getting good incremental visits, because we’re attracting consumers to parts of the day where perhaps they normally wouldn’t be visiting us, and that is kind of afternoon snacking, dinner and late evening,\u201d Borden said.<\/p>\n
As McDonald\u2019s leans into this new beverage platform, Borden confirmed that the company is still moving forward with removing self-serve soda machines from all locations by 2032.<\/p>\n Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @<\/em>BrookeDiPalma<\/em><\/a> or email her at bdipalma@yahoofinance.com.<\/em><\/p>\n Click here for all of the latest retail stock news and events to better inform your investing strategy<\/strong><\/p>\n<\/p><\/div>\n<\/div>\n<\/div>