McDonalds posts weaker-than-expected fourth-quarter earnings as higher U.S. menu prices fails to offset higher costs for the world’s biggest restaurant chain.
McDonalds Corp. (MCD) – Get McDonald’s Corporation Report posted weaker-than-expected fourth-quarter earnings Thursday as higher U.S. menu prices, as well as larger order sizes, failed to offset higher costs for the world’s biggest restaurant chain.
McDonald’s reported fourth-quarter net income of $1.64 billion, or $2.18 a share, up from $1.38 billion, or $1.84 a share, a year earlier. Operating costs and expenses rose by 14% in the quarter.
Excluding charges related to the sale of McD Tech Labs to IBM and other items, McDonald’s earned $2.23 a share, the company said, below the $2.34 a share expected by analysts polled by FactSet.
Net sales rose 13% to $6.01 billion, missing expectations of $6.03 billion. The company’s same-store sales climbed 12.3% from a year ago and 10.8% on a two-year basis. Menu price hikes that were implemented to combat rising food costs helped boost sales.
Even before the pandemic, McDonald’s had already been focused on modernizing and speeding up how customers get their Quarter Pounder combos quickly, including rolling ordering kiosks in its stores and pushing its app, where customers can order online and have it either waiting for them when they arrive or brought to their car.
Kempczinski highlighted just how much those efforts and changes paid off in comments during the company’s third-quarter earnings call. Delivery also has been a driver behind the sales boost — in addition to customers’ willingness to spend more money thanks to the shame of telling another human that you want you want that milkshake too being digitally removed.
McDonalds shares were down 1.74% at $245.50 in premarket trading.
