McDonald’s first-quarter profit rises nearly 5%

McDonald’s, the world’s largest restaurant chain, reported a 4.8% gain in first- quarter profit as new menu items such as Chicken McBites attracted US consumers.

Net income advanced to $1.27bn (€968m), or $1.23 a share, from $1.21bn, or $1.15, a year earlier, the company said. Analysts projected $1.23, the average of 26 estimates compiled by Bloomberg.

More than 3,700 people work for McDonald’s in 77 restaurants in Ireland. McDonald’s exports €200m in Irish goods each year, with one in five of its burgers sold in Europe made from Irish beef.

McDonald’s, which last month named Don Thompson to the chief executive position starting in July, has sought to draw Americans with new and limited-time items, such as McCafé drinks and Chicken McBites.

Sales at US stores open at least 13 months rose 8.9% in the quarter.

Analysts had projected 8.3%, the average of 22 estimates compiled by Consensus Metrix.

“McDonald’s is taking market share just because their restaurants are more up-to-date, more modern and cleaner” than competitors, Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview.

McCafé beverages, which are a “growing category”, are also helping boost sales, he said.

The chain, which plans to open 1,300 restaurants this year compared with 1,150 last year, is also updating stores to help lure customers. The company will spend about $1.45bn to remodel about 2,400 restaurants this year.

Its comparable-store sales increased 7.3% globally in the first quarter, compared with the 6.7% average estimate of analysts surveyed by Consensus Metrix.

Comparable-store sales advanced 5.5% in McDonald’s Asia, Pacific, Middle East, and Africa region, trailing estimates for a gain of 5.9%.

April same-store sales will rise about 4% globally, the company said in the statement.

Comparable-store sales are considered an indicator of a retailer’s growth because they include only older locations.

“Ongoing economic challenges and severe weather in February negatively impacted” its European restaurants, McDonald’s said in the statement.

Same-store sales in that region rose 5% in the quarter, compared with an estimate for growth of 4.2%. McDonald’s gets about 40% of its revenue from stores in Europe.

Revenue increased 7.1% to $6.55bn. Analysts estimated $6.54bn, on average. McDonald’s has more than 33,500 locations worldwide, of which about 80% are franchised.

Bloomberg