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McDonald’s benefited from inflation in Q3

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In the third quarter, McDonald’s sales rose again due to higher orders, price increases, new menu items, and fewer closings thanks to the ease of health restrictions.

McDonald’s shares soared Wednesday after the company reported a nearly 10 percent increase in sales, beating Wall Street expectations.

mcdonald's shares rose in Q3

On a conference call with analysts, McDonald’s Chief Financial Officer Kevin Ozan said, “We have not seen more resistance to our price increases than we have historically seen”. After increasing menu prices by 6% recently, the company uses third parties to determine prices and gauge customer sentiment. “Customer feedback has been positive on the latest update”.

A mix of factors has contributed to the rise in inflation in the United States this year. From higher commodity prices to a snarled global supply line to labor shortages, prices have been soaring lately.

A statement on Wednesday revealed that sales for the Chicago-based group, which has nearly 40,000 restaurants in 119 countries, increased 14 percent to $6.2 billion.

As the average order price soared in the United States, customers ordered more, paid higher prices, and enjoyed promotion-related items from the group. Additionally, the launch of a new loyalty program helped boost online sales for the group.

Domestic health restrictions impacted sales.

In the international market, sales were particularly strong in the UK as well as Canada, France, and Germany. The lifting of health restrictions played a key part in that result, as fewer restaurants were closed.

Health restrictions, however, led to flat sales in Australia. Similarly, the resurgence of Covid-19 cases in China has been dragging down McDonald’s sales domestically.

The group reported a net profit of $2.15 billion, up 22%.

As adjusted per share, the group’s profit was posted at 2.76 dollars, surpassing analysts’ expectations of 2.46 dollars. McDonald’s shares rose 3.5% Wednesday, the highest intraday gain in seven months.

For MetaNews.

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Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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