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Financing

McDonald’s sales keep rising despite labor challenges

The chain’s U.S. same-store sales rose 9.6% in 3Q, a 14.6% increase on a two-year basis, thanks to its chicken sandwich and its Famous Orders platform.
McDonald's third quarter sales
Photo courtesy of McDonald's

Saweetie apparently kept customers coming into McDonald’s despite a historic labor shortage.

The Chicago-based burger giant on Wednesday said its same-store sales rose 9.6% in the quarter ended Sept. 30 and 14.6% on a two-year basis.

That was largely in line with the second quarter when its two-year same-store sales increased nearly 15%. The company credited continued strong sales for its Crispy Chicken Sandwich as well as its Famous Orders platform.

The company also said that its loyalty program has “exceeded expectations” thus far. The company said on Wednesday that its MyMcDonald’s Rewards program has 21 million members already, 15 million of whom are active members.

Digital and delivery also continue taking off. The company said that 20% of its sales in its six largest markets are coming through its various digital channels, including kiosks, the company’s app and third-party services.

Executives said the sales strength, which has continued so far in the fourth quarter, is particularly strong in the morning and at dinner.

It is also coming through a combination of higher prices and larger order sizes. Franchisees and the company have raised prices 6% so far this year to offset higher labor and commodity costs. Customers are also making larger orders when they get delivery or go through the drive-thru.

“We’re still selling more stuff,” CEO Chris Kempczinski said on Wednesday. “We’re selling more sandwiches, we’re selling more fries. The absolute volume of what we’re selling is increasing.”

McDonald’s domestic sales strength has come despite a shortage of workers that has often closed restaurants for periods or reduced service down to drive-thru only. Operators have said privately they’re losing sales because of the closures. Chains like Domino’s, Popeyes and Del Taco have blamed labor for weaker-than-expected sales.

Executives did say labor was an issue, reducing hours late at night and slowing service in the drive-thru. But Kempczinski said the problem is “not unsolvable” and said that the company was hoping the situation would improve.

Marketing has been a strength for the company this year, as its Famous Orders platform has continued to drive sales.

The most recent version of the platform is tied to the rapper Saweetie and kicked off in August. The meal features a Big Mac, four-piece Chicken McNuggets, medium French fries and medium Sprite.

McDonald’s has been using the platform to considerable success over the past year, using a series of partnerships with musicians to sell meals named after them along with other merchandise.

The first of those partnerships, with Travis Scott, helped McDonald’s generate positive sales after the depths of the pandemic last year. The company has repeated those deals with J Balvin, BTS and most recently Saweetie.

McDonald’s international business has also seen significant improvements as more of its markets open up.

Globally, same-store sales rose 12.7%, or 10.2% on a two-year basis. Same-store sales rose 8.9% since 2019 in its larger international markets and 4.9% in its emerging international markets.

Revenues rose 14% to $6.2 billion. Net income rose 22% to $2.15 billion, or $2.86 per share.

Update: This story has been updated to include additional information.

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