McDonald’s recovery gathers momentum with best sales figures for four years

McDonald’s turnaround is showing signs of gaining steam — helped by all-day breakfasts, value deals, and lower commodity prices — even as labour costs and other headwinds linger.

The fast-food chain posted a 6.2% gain in same-store sales last quarter, the best performance in four years, and earnings topped analysts’ estimates.

The results show CEO Steve Easterbrook’s plan to revive the world’s largest restaurant chain is gathering momentum.

Since taking the helm over a year ago, he has revamped drive-thru ordering, tweaked kitchen operations, and slimmed down the menu.

The company also has reignited US sales with all-day breakfast and McPick two-for-$2 and two-for-$5 deals.

Yet challenges remain for the burger chain. Companywide revenue still declined last quarter, the seventh straight drop, and higher labour costs are pressuring its profit margins.

McDonald’s also is embroiled in a dispute with the National Labour Relations Board in the US over whether workers at its franchised restaurants qualify as company employees, a change that threatens to upend its business model.

While revenue dropped 0.9% to $5.9bn (€5.2bn) in the quarter, that beat analysts’ $5.81bn average projection.

Net income rose to $1.23 a share in the quarter, the Oak Brook, Illinois-based company said in a statement.

Profit is getting a boost from lower prices for ingredients, such as beef, and that trend may continue.

The company said it expects its “grocery bill” of 10 commodities to drop by as much as 4.5% in the US this year, a larger decline than the company predicted in January.

Bloomberg