By Hilary Russ and Deborah Mary Sophia
(Reuters) -McDonald’s Corp’s global comparable sales rose 12.6% in the first quarter, it said on Tuesday, blasting past Wall Street estimates as the burger chain banked on higher menu prices and more customer visits.
The company’s shares rose about 1% in premarket trading, as comparable sales also rose by the same 12.6% for all of McDonald’s geographical segments. Analysts had expected an 8.54% rise globally, according to Refinitiv IBES data.
The Chicago-based company kicked off quarterly earnings reports among publicly traded restaurants. Investors expect to see strong sales but will be listening for warnings about whether consumers will keep dining out as recessionary pressure builds through the rest of the year.
On Monday, the privately held sandwich chain Subway said its global comparable sales were 12.1% higher in the first quarter and that guest visits rose.
McDonald’s total revenue increased 4% from the prior year to nearly $5.9 billion in the three months ended March 31, the company said in an earnings release. That bested estimates of a 1.4% drop year over year to $5.587 billion, according to Refinitiv data.
Net income rose to $1.8 billion or $2.45 per share, from $1.1 billion or $1.48 per share a year earlier.
McDonald’s is restructuring its corporate operations, including laying off hundreds of U.S. employees and closing offices. It incurred $180 million of pre-tax restructuring charges, according to the earnings release.
It is launching improvements to its burgers including softer buns that are toasted and saucier Big Macs.
The company has also doubled down on meal deals and promotions, including a celebrity tie-up with Cardi B and Offset.
It previously said it was seeing low-income consumers spending less with each visit – but that they were visiting more often.
As of last year, McDonald’s menu prices had risen 10%, in line with other chains. Even so, it is still less expensive to dine at McDonald’s than many other restaurants.
The average spending per McDonald’s trip was $7.77 for the 12 months ended March 31, less than its closest burger rivals Burger King and Wendy’s and most other fast-food brands, according to data firm Numerator.
(Reporting by Deborah Sophia in Bengaluru and Hilary Russ in New York; Editing by Shounak Dasgupta and Lincoln Feast)
