Financing

McDonald’s sales accelerated last quarter, thanks to adult Happy Meals and the McRib

The company’s same-store sales rose 10.3% in the U.S. behind its marketing promotions and increased customer counts.
McDonald's 4Q sales
The McRib "Farewell Tour," along with other promotions like the adult Happy Meals, helped generate sales and traffic at McDonald's last quarter. / Image courtesy of McDonald's.

McDonald’s same-store sales rose 10.3% in the U.S. in the fourth quarter, the company said on Tuesday, as customers flocked to its restaurants for adult-oriented Happy Meals and McRib sandwiches.

The Chicago-based burger giant said that its same-store sales improved thanks to “strategic menu price increases and positive guest counts.”

The company also cited its digital sales, including mobile ordering and delivery. Digital sales in its top six global markets topped $7 billion in the quarter ended Dec. 31, or 35% of systemwide sales in those markets. Worldwide, same-store sales rose 12.6% as the company’s comparable sales rose in each of its major markets. Guest counts increased globally, too.

“We feel very good about our relative performance as evidenced by our strong traffic growth we had in the U.S. this year,” CEO Chris Kemczinski told investors on Monday.

The company’s performance came during a year in which the brand added more locations domestically for the first time since 2014. McDonald’s finished the year with 13,444 locations, or six more than at the end of 2021. The company is ow focused on more unit growth, arguing that now is the time to build more locations.

“When you want to be growing units is when you have strong comp sales because of that underlying health of the business,” Kempczinski said. “That gives us permission to put on top of that some unit growth.”

Revenues at the company were $5.9 billion in the period, up 5% from the same period when factoring out currency exchange rates. Net income rose 24% excluding the impact of foreign currency exchange rates, to $1.9 billion or $2.59 per share. McDonald’s results bested investor expectations for the period.

McDonald’s sales have thrived since the pandemic, even as consumers shifted from using the drive-thru to going back inside restaurants or using mobile order or delivery.

In the U.S., much of that streak has come on the back of a long run of successful marketing promotions, starting with the Travis Scott meal that kicked off its “Famous Orders” platform in 2020. In October, the company started offering a version of a Happy Meal aimed at adults, with boxes and four-eyed figurines designed by the streetwear maker Cactus Plant Flea Market.  

(For more on McDonald’s marketing success, check out “How marketing led McDonald’s out of the pandemic.”)

Half of the meals, which included four-eyed versions of characters like Grimace and Hamburglar, sold out in the first four days of the promotion, generating strong traffic at the chain’s restaurants.

A few weeks later, McDonald’s brought back its cult classic sandwich the McRib for a “farewell tour,” a marketing move that harkened back to a similar farewell 17 years ago.

The company may also be getting a benefit from consumers shifting spending from higher-end casual dining or even fast-casual chains toward cheaper, fast-food options. Inflation has hurt many consumers’ bank accounts, and many restaurant executives in recent months have talked about cutbacks by lower-income consumers.

Kempczinski said the company still expects a mild to moderate recession in the U.S. and a worse economic downturn in other parts of the world, notably Europe, where inflation is hammering franchisees. McDonald’s expects to spend $100 million to $150 million to help operators there struggling with inflation.

Still, the company has added $20 billion to its system sales since the pandemic, Kempczinski said, despite the closure of some 800 locations in Russia. Globally, system sales is up 25% on a three-year basis, including in the U.S. That has McDonald’s thinking about accelerating its store growth worldwide and domestically. 

McDonald’s recently announced an organizational restructuring, called “Accelerating the Organization,” including an analysis of staffing levels, that the company hopes will result in improved speed and efficiency throughout the business. But it also includes an effort to speed unit growth. 

“Our strong comp and brand performance have given us the right to build new units at a faster rate,” Kempczinski said, promising more details on where, when and what type of restaurants “sometime in late 2023.”

UPDATE: This story has been updated to add quotes and details.

 

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