Apr 25, 2016

    McDonald's revamped menu spices up Q1 profits


    ALL-DAY breakfast and the McPick2 value promotion lifted McDonald's United States sales in the first quarter, enabling the fast-food company to score a big jump in earnings.

    The burger chain, which installed Steve Easterbrook as chief executive a year ago with a mission to turn around its sagging business, had net income of US$1.1 billion (S$1.5 billion), up 35.4 per cent from the year-ago period.

    The results mark the third straight quarter of earnings growth under Mr Easterbrook, who has put improved customer service at the centre of efforts to reinvigorate the 61-year-old restaurant chain.

    The solid performance in the US market, which typically garners about a third of McDonald's revenues, was propelled by the launch of the popular "all day breakfast" menu, which gives customers free rein on when to order pancakes, Egg McMuffins and other popular items.

    Mr Easterbrook told analysts on Friday that the goal now was to take advantage of that momentum. The restaurant chain has experimented with various value-oriented propositions with mixed success, he said.

    McDonald's believes it may have found a promising proposition in the month-long McPick 2 value promotion, which charged US$5 for any two from a list of popular offerings that include the Big Mac, Chicken McNuggets and a Quarter Pounder with Cheese. These items generally sell for between US$3 and US$5 each.

    For the quarter, global comparable sales rose 6.2 per cent, with the US up 5.4 per cent.

    Especially strong overseas markets included Britain, Australia, Canada, China and Japan.

    Better sales in China and Japan marked a recovery from 2014, when the company was hit hard by a scandal involving a supplier who sold contaminated meat.

    McDonald's announced plans last month to open more than 1,500 restaurants in China, Hong Kong and South Korea over the next five years.