In the recent quarter, the company’s global comp sales rose 4%, reflecting positive comp sales in all segments. Comp sales in US alone rose 2.6% and systemwide sales grew 5% in constant currencies.
On the other hand, rival Starbucks (SBUX) reported comp sales growth of just 1% both globally and in the US in its recent Q3 2018. McDonald’s also saw double digit-growth in reported and adjusted earnings figures.
The positive result was mainly due to the refranchising strategy. McDonald’s aggressively refranchised its restaurants in several territories including China and Hong Kong last year. To increase its appeal, McDonald’s tweaked its menu offering to more healthier options, besides all-day breakfast.
Revenue Woes
Meanwhile, the company has been struggling with sinking revenues. Even in the recent Q2 2018, revenue slipped 12% to $5.35 billion. Though the company offers healthy alternatives, its core menu of burgers, fries and soda, is losing to more healthier options of other food chains. In Q2 2018, the company’s US foot traffic fell 0.3%. The trade war with China has led to a fall in the foot traffic in China also.
RELATED: McDonald’s earnings soar 12% in Q2 2018
Despite the drop in foot traffic, the company managed to report a growth in its same-store sales globally, a key metric for restaurant companies. In the long-term, if the company manages to revamp its menu to please its customers and stay away from serving debacles, it should sail smoothly in the coming years.
Consensus Recommendation
Out of all the analysts offering ratings, the stock earned a ‘BUY’/ ‘STRONG BUY’ rating from 13 analysts, based on data provided by Zacks Research.
Recent Infographic
