McDonald’s Reports Sales Up 6.6% Worldwide

McDonald’s, the world’s largest hamburger chain, reported second quarter global sales were up 6.6% and U.S. sales increased 3.9%, aided by $1 soda sales.

“We’re building a better McDonald’s and more customers are noticing,” said McDonald’s President and Chief Executive Officer Steve Easterbrook.  “Our relentless commitment to running great restaurants and keeping the customer at the center of everything we do is generating broad-based strength and momentum across our entire business.  For the quarter, we delivered our strongest global comparable sales and guest count results in more than five years.  We’re now introducing our Velocity Growth Plan accelerators in more restaurants around the world, bringing meaningful benefits to more customers through digital, delivery and our Experience of the Future.”

Second quarter highlights:

  • Global comparable sales increased 6.6%, reflecting positive guest counts in all segments
  • Consolidated revenues decreased 3% (2% in constant currencies), due to the impact of the Company’s strategic refranchising initiative
  • Systemwide sales increased 8% in constant currencies, due to strong comparable sales performance and restaurant expansion
  • Consolidated operating income increased 24% (26% in constant currencies), which included a benefit from the prior year’s strategic charges of approximately $230 million
  • Diluted earnings per share of $1.70 increased 36% (38% in constant currencies). Excluding the impact of the current quarter and prior year strategic charges of $0.03 and $0.20 per share, respectively, diluted earnings per share increased 19% (21% in constant currencies)
  • Returned $1.8 billion to shareholders through share repurchases and dividends

In the U.S., second quarter comparable sales increased 3.9%, reflecting the national cold beverage value promotion and the launch of the Signature Crafted premium sandwich platform. Since spring, McDonald’s has been promoting any size soft drink for just $1 and small cold frappes, shakes and smoothies for $2. Operating income for the quarter increased 5%, reflecting higher sales-driven franchised margin dollars, G&A savings and higher gains on sales of restaurants.

Comparable sales for the International Lead segment increased 6.3% for the quarter, led by continued momentum in the U.K., strong performance in Canada and Germany and positive results across all other markets. The segment’s operating income increased 8% (13% in constant currencies), fueled primarily by sales-driven improvements in franchised margin dollars.

In the High Growth segment, second quarter comparable sales increased 7.0%, led by strong performance in China and positive results across the entire segment. The segment’s operating income rose 28% (28% in constant currencies), with about half of the increase resulting from lower depreciation expense due to the accounting treatment related to the pending sale of the China and Hong Kong businesses.

In the Foundational Markets & Corporate segment, second quarter comparable sales rose 13.0% and operating income increased significantly, led by very strong performance in Japan as well as strong results across the segment’s other geographic regions. The segment also benefited from comparison to the prior year’s strategic charges.

McDonald’s has over 37,000 locations in over 100 countries. Approximately 85% of McDonald’s restaurants worldwide are owned and operated by independent local business men and women.