McDonald's stock (NYSE: MCD) was up around 3% overnight after revelations that hot products like a “Minecraft”-themed meal had helped the Dow Jones fast food chain beat Q2 estimates with customers spending more per visit.
Reflecting a major turnaround from its first quarter slump – when consumers were cutting back on fast food - the Chicago-based burger giant reported a 7% increase in earnings to $3.19 per share.
Revenue rose 5% to US$6.84 billion in the April-June period, higher than analysts' $6.7 billion estimates.
While analysts had predicted a 1% decline, same-store sales - or sales at locations open at least a year - jumped nearly 4%.
A meal tied to “A Minecraft Movie,” - offered in 100 countries starting in April – and new McCrispy chicken strips, which were added to the menu in May, were understood to have driven some customers back to stores.
McDonald's second-quarter domestic sales were also lifted by promotions, including $5 meals, the Snack Wrap's return and the option to add a number of items to an order for $1.
CEO Chris Kempczinski told the market that more value on McDonald's "core menu" is crucial for the chain to stage a comeback with low-income consumers, who recorded a double-digit decline in visits during the quarter.
“That poses a problem for McDonald's, which is working with franchisees to bring back customers who are put off by $10 combo meals at the drive-thru,” Kempczinski said.
"We've got to get that fixed… the single biggest driver of what shapes consumers' overall perception of McDonald's value is the menu board."
McDonald’s net income rose 11% to $2.25 billion in the second quarter.
Adjusted for restructuring charges and other one-time items, the company earned $3.14 per share in line with Wall Street’s forecast.
Global comparable sales rose 3.8%, beating analysts' expected 2.6% growth.
Due to rising transaction size per customer, U.S. markets saw comparable sales rise 2.5%, reversing from a 0.7% decline last year, while same-store sales at international markets increased 4%.
The company's license development in international markets saw positive comparable sales across all geographic regions, led by Japan, while systemwide sales increased 6% on a currency-adjusted basis.
Meanwhile, some of McDonald’s rivals in the fast food stakes didn’t fare quite so well in the April-June period.
Yum Brands, the parent company of KFC, Taco Bell and Pizza Hut, reported lower-than-expected revenue yesterday and said KFC’s same-store sales dropped 5% in the U.S.
Meanwhile, last month, Chipotle lowered its full-year same-store sales guidance after a disappointing second quarter that saw same-store sales fall 4%.
