McDonald’s menu energises 1Q earnings

Higher prices on McDonald’s menu have led to surprisingly strong comparable-store sales during the first quarter.

The company worked to grow its US business with new initiatives, like swapping out frozen beef patties for fresh ones in its Quarter Pounder burger.

It also launched a new value menu earlier this year, reviving its once-popular Dollar Menu, but with items priced at $US1, $US2 or $US3. The idea is to get people in for cheaper items who then upgrade to pricier ones.

Sales rose 2.9 per cent at established restaurants in the US, the company’s biggest market. Worldwide, that figure rose 5.5 per cent, which is a lot stronger than the 3.6 per cent increase that industry analysts had forecast, according to a survey by FactSet.

The company also reported healthy profits and revenue. McDonald’s earned $US1.38 billion ($A1.83 billion), or $US1.72 per share, for the period ended March 31. A year earlier, the hamburger chain earned $US1.21 billion, or $US1.47 per share. Adjusted earnings came to $US1.79 per share, which is way better than the per-share earnings of $US1.67 that industry analysts had projected, according to Zacks Investment Research.

Total revenue declined 9 per cent $US5.14 billion, but still beat expectations. McDonald’s said the drop was due to its ongoing move to convert more company-owned restaurants into franchised ones, lowering its revenue.