McDonald's posts strong proof turnaround is working

mcdonalds exterior

McDonald’s turnaround surged ahead in the first quarter, with same-store domestic sales rising year over year by 5.4 percent and global comps rising 6.2 percent.

Management attributed the brand’s strength in the U.S. to the growing popularity of the all-day breakfast menu that was introduced last year and the nationwide McPick 2 value deal. It also noted the slight topspin of having an extra business day because 2016 is a leap year.

The company emphasized that better unit-level margins boosted operating income for the quarter by 15 percent.

Overall, net income rose 35 percent, to $1.1 billion, on a one-point revenue decline, to $5.9 billion.

The first quarter domestic comp gain compared with a 5.6 percent rise in the fourth quarter. But many observers had wondered if McDonald’s could sustain sales growth of that magnitude.

The company pledged to stoke the turnaround by continuing to focus on value, kitchen simplification and “core menu enhancements.” The chain confirmed this week that it’s about to test two riffs on its most iconic core menu item, the Big Mac.

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