Key Takeaways
- McDonald’s stock rose in intraday trading Monday even as the fast-food giant’s second-quarter earnings fell short of analyst expectations.
- McDonald’s leadership said in Monday’s earnings call that the $5 value meal the company launched last month has been successful, and confirmed reports that nearly all the company’s U.S. locations have approved extending the offer.
- McDonald’s shares rose 4% after the company’s earnings release and discussion.
McDonald’s (MCD) shares rose 4% in afternoon trading Monday as the fast-food giant’s second-quarter earnings call reassured investors about its outlook after a disappointing second-quarter earnings report.
Microsoft focused on the chain’s outlook, from its plans for digital platforms and reward program to the benefits of the “$5 meal deal” the company launched last month. Executives including Chief Executive Officer (CEO) Chris Kempczinski said they have seen sales growth among lower-income consumers during the value meal’s cycle, an upbeat sign from a market where the company’s sales have lately suffered as prices have risen.
Value Meal Driving Sales
The company confirmed recent reports that most McDonald’s U.S. locations have approved a plan to extend the deal beyond the initially planned four weeks, with executives saying they have discussed extending it even further.
They also discussed the importance of having a strong value perception among consumers, and said they are evaluating a number of strategies to increase consumer awareness of the value McDonald’s presents, including expanding the value menu and through local deals.
“I think it’s also clear to us that in a number of markets that you need to have a broader value platform and that trying to move the consumer with narrow offerings that are one item or a few items is just not sufficient,” Kempczinski said Monday.
While comparable-store sales have remained lower in July, executives said they are encouraged by the foot-traffic numbers they are seeing in stores, with many customers who come in for the meal deal buying more than just the deal, with average tickets running above $10.
McDonald’s shares were up 4% Monday afternoon, leaving the shares down about 11% this year.