CHICAGO — McDonald’s fancy $5 burgers are proving to be a hit with the $1 menu crowd.
CHICAGO — McDonald’s fancy $5 burgers are proving to be a hit with the $1 menu crowd.
The world’s largest burger chain on Tuesday reported a 28 percent jump in second-quarter profit, thanks to sales of its new Signature Crafted line of burgers and $1 drink promotion. McDonald’s shares jumped on the news, climbing $7.22, or 4.8 percent, to close at $159.07.
Increased delivery orders through UberEats, in-restaurant technology like ordering kiosks and Bluetooth-enabled table service, and selling more restaurants to franchisees also boosted the burger giant’s earnings.
McDonald’s CEO Steve Easterbrook said on a conference call that technology across the chain is making customers happier and leading to more repeat visits. That improvement in customer traffic is critical for the brand, which has seen traffic stall or decline for years.
While earnings over the past two years have been boosted by strong promotions like all-day breakfast, Easterbrook said customer traffic, or guest counts, “are the ultimate measure of our progress.”
In the second quarter, customer volume was up in all of McDonald’s major markets for the first time since 2008. Delivery, in particular, is helping McDonald’s reach a new U.S. customer, Easterbook said.
Signature Crafted sandwiches are McDonald’s latest attempt at a premium burger and include mix-and-match toppings like Pico Guacamole and Sweet BBQ Bacon with a choice of chicken or beef.
Comparable sales, or sales at stores open at least 13 months, rose 3.9 percent in the U.S. during the period, aided by higher guest visits.
The metric is closely watched by analysts because it strips out the benefit of newly opened stores. McDonald’s, headquartered outside Chicago, credited the gain to its efforts in improving convenience, value and the addition of new menu items in the U.S., its biggest market. Across the globe, comparable sales rose 6.6 percent.
As more customers were coming through the doors and ordering through UberEats, McDonald’s kept price increases minimal to keep its value-conscious visitors happy. Prices rose about 1.8 percent in the U.S. on average during the quarter, a slower pace than the restaurant industry overall.
McDonald’s also got a lift from its ongoing “refranchising” effort, the sale of thousands of company-owned restaurants worldwide to franchisees. Restaurants run by franchisees are far more profitable than those run by the company.
McDonald’s earned nearly $1.4 billion, or $1.70 per share in the latest quarter, compared with $1.09 billion, or $1.25 per share, in the same three months a year earlier.
Revenue fell 3 percent to $6.05 billion, as sales gains at restaurants owned by franchisees were offset by a decline at company-operated stores.