McDonald's US sales climb, customer traffic still a focus

By CANDICE CHOI Markets Associated Press

  • In this Monday, April 24, 2017, photo, corporate signage hangs at a McDonald's restaurant in downtown Pittsburgh. McDonald's Corp. reports earnings on Tuesday, April 25. (AP Photo/Keith Srakocic)

  • This Monday, April 24, 2017, photo shows a McDonald's restaurant in downtown Pittsburgh. McDonald's Corp. reports earnings on Tuesday, April 25. (AP Photo/Keith Srakocic)

McDonald's says new Big Mac sizes helped boost a key sales figure in the U.S., but that it is still working on trying to attract more customers to its stores.

Continue Reading Below

The world's biggest burger chain said Tuesday that global sales rose 4 percent at established locations in the first three months of the year. That included a 1.7 percent increase in its flagship U.S. market, where the fast-food chain has suffered four straight years of declining customer visits.

Sales rose as a result of higher prices, the company said, and from smaller and bigger versions of the Big Mac that helped drive up average spending. Customer visits were "relatively flat" from a year ago, when factoring out the benefit of an extra day in last year's quarter.

McDonald's Corp. said its results show it is "strengthening its foundation" in the U.S. as it tries to improve the image of its food and looks to the rollout of options like mobile order-and-pay and expanded delivery to drive sales moving forward. The sales bump was better than analysts expected, and built on a 5.4 percent increase from a year ago. Sales were also stronger in other parts of the world, including the United Kingdom and China, and McDonald's stock hit an all-time high at $140.82.

Still, CEO Steve Easterbrook said Tuesday that executives have had "honest conversations" about the declining customer traffic in the United States.

"Let's acknowledge the guest counts that we've lost, because frankly we want those back," he said during a conference call with analysts.

Continue Reading Below

Compared with 2012, McDonald's has said its customer visits in the U.S. are down by 500 million a year, in part because it has failed to hold onto deal seekers after doing away with the Dollar Menu. To help address that, the company has been offering $1 coffee drinks and more recently introduced $1 sodas of any size.

As part of its campaign to step up the perceptions about its burgers, McDonald's recently announced it will start using fresh instead of frozen beef for its Quarter Pounders sometime next year. In late 2015, it also introduced an all-day breakfast menu.

McDonald's has also trimmed its domestic store base for the past two years. McDonald's closed additional stores in the first quarter, bringing its store base to 14,094 locations as of March 31. On a global basis, it is expanding and had more than 36,900 locations, including the domestic stores.

For the quarter, McDonald's reported a profit of $1.21 billion, or $1.47 per share. Analysts expected $1.32 per share, according to Zacks Investment Research. Total revenue was $5.68 billion, also beating the $5.48 billion analysts expected.

__

Follow Candice Choi at www.twitter.com/candicechoi