Financing

McDonald's sales soar, thanks to Grimace

The burger giant’s same-store sales rose 10.3% in the second quarter as digital and marketing continued to drive demand.
McDonald's earnings
McDonald's sales rose more than 10% last quarter on the back of marketing and digital. | Photo courtesy of McDonald's.

McDonald’s had more strong sales last quarter, thanks to TikTok and Grimace.

The burger giant’s U.S. same-store sales rose 10.3% in the second quarter, the company said on Thursday, continuing a strong run of sales growth as its marketing strength continued to outpace much of its competitors.

McDonald’s cited “culturally relevant brand and marketing campaigns,” such as the Grimace birthday promotion that unexpectedly took off on social media in the last two weeks of the quarter, generating millions of impressions and bolstering demand for the purple Grimace shake. Company executives said there were 3 billion views of Grimace shake videos on TikTok alone.

But the company also said digital and delivery contributed to sales growth in the period. “If I'm being honest, the theme was Grimace,” CEO Chris Kempczinski said on the company's second-quarter earnings call on Thursday. "Grimace was everywhere."

Revenues at the Chicago-based chain rose 14% in the quarter to $6.5 billion. Earnings per share nearly doubled to $3.15 on net income of $2.3 billion. The results bested Wall Street expectations, according to the financial services site Sentieo/AlphaSense.

To be sure, there are some signs of a modest slowdown in sales, at least on a two-year basis. Same-store sales on a two-year stack basis rose 14% in the quarter, compared with more than 16% in the first quarter. Still, the company said it is generating sales from both strategic menu price increases and positive guest counts.

McDonald's has some 56 million members of its MyMcDonald's Rewards loyalty program in its six biggest markets and membership is growing in the "high single digits." Those customers help drive sales: Customer frequency is 15% higher among members, executives said.

The company is also seeing strong early results from its "Ready on Arrival" function for orders on its mobile app, allowing restaurants to start preparing those orders before customers arrive. McDonald's is getting higher sales and customer satisfaction from those orders, executives said. 

Globally, same-store sales rose 11.7% in the quarter, including 11.9% in its International Operated Markets, featuring its most established international markets such as the U.K., Canada and Australia. The company in particular highlighted results in the U.K. and Germany.

Same-store sales rose 14% in the company’s International Developmental Licensed Markets and corporate locations, led by strong performance in China, where the economy is emerging out of COVID-related shutdowns.

Company executives on Thursday suggested that its run of strong sales could slow later this year, largely for three reasons: Lower inflation will likely result in fewer price hikes; the tailwind from the post-COVID environment is waning, and the macroeconomic environment remains challenging. Still, Kempczinski said, the company is unlikely to push any more value offers, believing it has the right combination of value offers globally. "We're winning on value," he said. 

UPDATE: This story has been updated to include information from McDonald's second-quarter earnings call.

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