McDonald's beats quarterly global sales estimates as value bets pay off

By Savyata Mishra and Waylon Cunningham

Feb 11 (Reuters) - McDonald's ‌topped Wall Street estimates for ​fourth-quarter global ​comparable sales and profit on Wednesday, as meal deals and strong marketing promotions pulled in budget-strapped U.S. diners and demand held firm in Australia and Britain.

Global same-store sales at the burger giant rose 5.7% in the three ‌months ended December 31, outpacing analysts' average estimate of a 3.7% increase, according to data compiled by ⁠LSEG.

CEO Chris Kempczinski said on an earnings call that there was growing evidence that the Chicago-based company's value strategy was working, with gains in low-income customer ‌visits.

McDonald's last year began subsidizing franchisees' "extra value" ‌meals but those subsidies are tapering off.

"We don't subsidize pricing on a permanent basis," Kempczinski said.

GRINCH MEAL CREATES HISTORY

In December, McDonald's added a holiday-themed Grinch meal as part of its promotions. The meal notched "the highest single sales day in history," executives said.

The ​company brought back its Monopoly tie-in after nearly a decade in October, followed by a slate of value offers as low as $5 in November.

"MCD has to continue to grind away with marketing and value promotions that keep traffic positive and growing," said ⁠Jim Sanderson, analyst at Northcoast Research.

Comparable sales in the U.S., McDonald's largest market, rose 6.8% in the October to December period, marking the biggest jump in about two years, ​compared with a 1.4% dip a year earlier, when an E. coli outbreak dented demand. Analysts were estimating a 4.9% rise.

CHEAPER OPTIONS A HIT

McDonald's has posted rising sales when many restaurant operators are struggling ​to retain traffic as consumers have tightened their belts.

Cheaper options have fared ‌better than the rest. Taco Bell same-store sales rose 7% in the latest quarter and KFC sales grew 3%, parent company Yum Brands said last week. Meanwhile, sales at the higher-priced Chipotle Mexican Grill ⁠declined 1.7%, the company reported earlier in February.

STRONG INTERNATIONAL DEMAND Sales in McDonald's business segment, where restaurants are operated by local partners, jumped 4.5%, led by Japan, while international market sales rose 5.2%, driven by demand in Britain, Germany and Australia.

Franchisee outlook on store performance for the next six months ⁠was the highest it has been in nearly three years, according to independent analyst Mark Kalinowski's franchisee survey from January.

McDonald's earned $3.12 per share on an ​adjusted basis in the fourth quarter, topping expectations of $3.05. Revenue rose 10% to $7.01 billion.

The company expects capital expenditure of $3.7 billion to $3.9 billion in 2026, mostly on new units, and plans to open about 2,600 restaurants globally.

It forecast operating margin to be in the mid-to-high 40% range for the year, ‌compared to 46.1% in 2025.

"Global cost inflation remains a headwind that will pressure margin expansion without consistent traffic growth that drives operating leverage across the P&L," Sanderson said.

Shares of the company were marginally ‌lower in trading after the bell.

BEVERAGE BET GROWS

McDonald's is pushing deeper into the fast-growing and lucrative beverage segment, targeting cold coffees, crafted sodas and energy-style drinks to ⁠boost visits, particularly by younger consumers.

The burger chain plans ‌to roll out a new McCafe‑branded drink ​lineup in the U.S. and select international markets this year, building on a 500-store test that exceeded expectations, executives said on the call.

(Reporting by Savyata Mishra in Bengaluru and Waylon Cunningham in New York; Editing ‌by Sriraj Kalluvila)

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