Interactive Investor

ii view: McDonald’s sales stay robust during cost-of-living crisis

25th April 2023 15:34

by Keith Bowman from interactive investor

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Opening new outlets, initiatives to grow digital-related sales and sat on an estimated future dividend yield of around 2%. Buy, sell, or hold? 


First-quarter results to 31 March

  • Global comparable sales up 12.6% 
  • Adjusted earnings per share up 15% to $2.63 

Chief executive Chris Kempczinski said: “Running great restaurants is fundamental to our business momentum. We have refocused on operational excellence through our global Performance and Customer Excellence (PACE) initiative, and we’ve seen significant customer satisfaction improvement around the world. Amid a challenging operating environment, customer demand for McDonald’s brand remains strong.”

ii round-up:

Restaurant giant McDonald's Corp (NYSE:MCD) today detailed sales and earnings which topped Wall Street forecasts as demand globally for its burgers and drinks stayed robust. 

Increased menu prices helped first-quarter revenues rise 4% year-over-year to $5.89 billion (£4.6 billion), pushing adjusted earnings up 15% to $2.63 per share and ahead of analyst estimates nearer to $2.35 per share. 

Shares for the Dow Jones index member were little changed in early US trading having come into this latest news up by around 10% year-to-date. That’s similar to both KFC owner Yum Brands Inc (NYSE:YUM) and coffee giant Starbucks Corp (NASDAQ:SBUX), and compares to a 2% rise for the Dow itself and a near 8% rise for the broader S&P 500 index during 2023. 

McDonald’s operates in more than 40,000 locations in over 100 countries. Like-for-like or comparable sales for each of its three geographical regions rose 12.6% over the quarter to the end of March. 

Revenues for its home US division benefited from both increased selected menu price increases and growth in customer footfall as consumers potentially traded down during the cost-of-living crisis. 

Under its ‘Accelerating the Arches strategy’, it is looking to build on areas including delivery, digital-related sales and Drive-Thru. Its customer loyalty programme now operates in more than 50 markets with its app being downloaded over 40 million times in the US during 2022.

The Chicago-headquartered company previously announced a management reorganisation and a series of job cuts aimed at helping it focus on accelerating the roll-out of new restaurants. It is targeting around 1,900 new outlets globally during 2023. 

ii view:

Started in 1955, McDonald’s today employs more than 100,000 people. Along with its home US business, its International Operated division includes the likes of Germany, France and Australia, while its International Developmental Markets business covers countries such as Japan, China and Brazil. Around 95% of its restaurants are owned and operated by independent local business owners. 

For investors, as with businesses more generally, inflationary pressures remain an issue. A backdrop of rising interest rates and a cost-of-living crisis for consumers cannot be ignored, while an estimated future price earnings (PE) ratio above the 10-year average suggests the shares are not obviously cheap. 

On the upside, and despite some selected price increases, its value-based menu looks to remain highly attractive to cost-pressured consumers. Management initiatives, including accelerating the roll-out of new outlets, are being pushed, while its record of increasing the dividend payment annually since 1976 is not to be forgotten.

In all and given its position as a staple in many consumers lives, McDonald’s appears to remain worthy of its place in many already diversified long-term focused portfolios.


  • Defensive value product offering
  • Progressive dividend policy


  • Cost pressures
  • Subject to currency fluctuations 

The average rating of stock market analysts:


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