McDonald’s sales growth breaches 2019 levels as pandemic curbs ease

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FILE PHOTO: The McDonald's company logo stands on a sign outside a restaurant in Bretigny-sur-Orge, near Paris

By Nivedita Balu and Hilary Russ

(Reuters) – McDonald’s Corp on Thursday beat Wall Street estimates for comparable sales, and said it returned to pre-pandemic levels of growth, driven by eased COVID-19 restrictions in some markets and U.S. customers, flush with stimulus cash, craving new chicken sandwiches and nuggets.

First-quarter global comparable sales growth of 7.5% surpassed pre-pandemic 2019 levels, Chief Executive Officer Chris Kempczinski said. That trounced the 4.71% growth expected by analysts polled by Refinitiv IBES.

Shares rose 0.6% on the New York Stock Exchange after the opening bell.

The Chicago-based burger chain also raised its 2021 systemwide sales outlook to the mid-teens from the low double-digits.

An intense vaccination drive and the distribution of coronavirus relief checks encouraged more people in the United States to eat out.

“The stimulus checks are now wearing off generally, but we’re seeing continued momentum in our business,” Kempczinski said during a call with analysts.

Fast-food chains have managed to weather pandemic restrictions much better than others in the industry, given their drive-throughs, delivery networks and competitive pricing.

McDonald’s also rolled out its crispy chicken sandwiches earlier this year in the United States, looking to tap into a frenzy kicked off by privately owned Chick-fil-A and Restaurant Brands International Inc’s Popeyes in 2019. It also brought back spicy chicken nuggets.

Those factors, combined with celebrity marketing campaigns, helped power a 13.6% jump in sales at restaurants open for more than a year, trouncing expectations of 9.25%, according to the analysts.

Sales were driven in part by higher tabs, with traffic lower across all segments.

McDonald’s also showed strong growth in its international markets, with Britain, Australia and Canada recording a rise in sales.

However, COVID-19 resurgences in some markets led to volatility and new government restrictions, particularly in France and Germany.

The company said it had 40 million active users of its digital app in its top six markets – about half of them in the United States.

Net income rose to $1.54 billion, or $2.05 per share, for the first quarter, from $1.11 billion, or $1.47 per share, a year earlier.

Revenue increased 9% to $5.12 billion, above estimates of $5.03 billion.

Excluding onetime items, the company earned $1.92 per share, well above the expectation of $1.81.

(Reporting by Nivedita Balu in Bengaluru and Hilary Russ; Editing by Anil D’Silva, Steve Orlofsky and Jonathan Oatis)

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