McDonald’s sales rise, thanks to digital and loyalty

Same-store sales rose 3.5% in the U.S. in the first quarter and surged overseas. Yet the Russian invasion of Ukraine cost the company $127 million.
McDonald's first quarter eearnings
Photo courtesy of McDonald's

McDonald’s same-store sales rose 3.5% in the first quarter, the company said on Thursday, as operators continued raising prices and consumers flocked to the company’s digital channels.

International sales surged, however, including more than 20% same-store sales growth in its largest international markets as revenues bested investors’ expectations for the quarter. Worldwide, same-store sales rose 12%.

But both the Russian invasion of Ukraine and an international tax matter cost the burger giant millions. The company said it is reserving $500 million “for a potential settlement related to an international tax matter.”

The company also said that its costs for the Russian invasion of Ukraine cost the company $127 million, including $27 million for salaries, leases and other payments and $100 million in inventory that will need to be disposed.

Still, revenues at the Chicago-based chain rose 11% to $5.7 billion. Net income fell 28% to $1.1 billion, or $1.48 per share. Yet earnings per share was $2.28 when factoring out the tax and Ukraine issues.

“In most of our major markets, we sustained QSR traffic share gains by focusing on elevating our brand, accelerating digital channels and showcasing our core equities of chicken and beef,” CEO Chris Kempczinski said in a statement.

McDonald’s domestic same-store sales recovered quickly from the pandemic thanks to the company’s plentiful drive-thrus. But the chain’s digital sales have also given the brand a boost.

Digital sales at the chain’s six largest global markets totaled more than $5 billion in the first three months of the year, or more than 30% of systemwide sales during the period. Digital sales include mobile order, kiosks and delivery.

The company does not break down the percentage of sales from each individual channel, but delivery sales have been strong enough that McDonald’s inked new deals with major third-party delivery providers in recent months, including DoorDash and Uber Eats.

MyMcDonald’s Rewards, the company’s loyalty program that made its debut last year, has also been given credit for bolstering sales. The company also said that its marketing promotions involving core menu items also drove sales during the period. The company brought back its Szechuan Sauce for a limited time and earlier let customers order “menu hacks.” Many of the chain’s promotions were targeted at least in part at loyalty customers.  

McDonald’s operated 847 mostly company locations in Russia before the invasion. The company opted to close its restaurants there but continue paying salaries for workers there, a move that executives estimated previously would cost $50 million a month.

McDonald’s U.S. same-store sales

Source: Company, SEC filings

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