McDonald’s winning behind ‘big bets’

McDonald’s winning behind ‘big bets’

CHICAGO — “Big bets” made during the pandemic — including the debut of Famous Orders pairing celebrities with combo meals and the launch of its loyalty program in the United States — continued to pay dividends at McDonald’s Corp. in the third quarter.

McDonald’s US comparable sales rose 9.6% during the third quarter of fiscal 2021.

“We continued to see positive comps across all dayparts on a two-year basis with sustained double-digit comps at dinner and breakfast,” Kevin M. Ozan, chief financial officer, said during an Oct. 27 conference call with analysts. “At the same time, franchisees continue to achieve record-high restaurant cash flow. Our US franchisees have never been better positioned to weather the labor and inflation pressures while still investing in growth. Performance in the US remains driven by strong average-check growth, reflecting larger order sizes and menu price increases.

“The big bets we’ve made during the pandemic are paying dividends across the business and enabling us to maintain our QSR leadership. Menu and marketing efforts with products like the Crispy Chicken Sandwich and successful Famous Orders like the Saweetie Meal have elevated our brand and helped drive underlying sales growth across the business. The launch of our loyalty program in the US has exceeded expectations and is driving increased digital adoption. In just a few short months, we already have over 21 million members enrolled, with over 15 million active loyalty members earning rewards, and we expect that number to continue to grow.”

Overall, comparable sales rose 12.7% at McDonald’s during the quarter.

Net income for the quarter ended Sept. 30 totaled $2.15 billion, equal to $2.86 per share on the common stock, up 22% from $1.76 billion, or $2.35 per share, in the same period a year ago.

Sales for the quarter increased 14% to $6.2 billion, up from $5.42 billion.

McDonald’s share price jumped as high as $246.06 on Oct. 28, a day after the company’s earnings release, up 4% from a close of $236.42 on Oct. 26.

Christopher J. Kempczinski, president and chief executive officer, said marketing momentum contributed to a lot of the success at McDonald’s during the quarter. And that marketing success could be traced back to what he described as “McDonald’s craveable core menu.”

“In the US, Crispy Chicken Sandwich sales continue to exceed expectations,” Mr. Kempczinski said. “This translated into significant growth in QSR chicken market share as we continue to support the Crispy Chicken Sandwich platform with culturally relevant marketing.

“In the UK, we launched our McSpicy Sandwich, which generated the market’s best chicken promotional results on record. And in Canada, our Spicy McNuggets promotion had a halo effect on McNuggets sales.

“This quarter, we introduced the McPlant Sandwich in Austria and The Netherlands as a limited-time offer, and both the UK and Ireland launched the McPlant in a limited number of restaurants, with a goal to roll out nationwide in January. McPlant is available for other markets to pull down based on customer demand. As always, we’ll do what McDonald’s does best: listen to our customers. When people are ready for the McPlant, we’ll be ready for them.”

Elaborating on the McPlant Sandwich, Mr. Kempczinski said the product is “largely an operations test right now” in the United States, with availability in less than 10 restaurants. By comparison, the sandwich is in 250 restaurants in the United Kingdom and plans call for a national rollout in that country in the first quarter of fiscal 2022.

“I think we have more evidence that it is filling an unmet need that certainly existed in the UK on their menus,” he said.

Net income for the first nine months of fiscal 2021 was $5.91 billion, or $7.86 per share, up 76% from $3.35 billion, or $4.47 per share, in the first nine months of fiscal 2020.

Sales for the period were up 24% at $17.21 billion.