Third-quarter McDonald’s sales reports show the burger giant’s efforts to win back customers are paying off.
McDonald’s recent efforts to turn around sales in the face of growing competition are beginning to produce results that have customers – and financial analysts – loving the chain once more. With sales and stock prices both moving in a positive direction, some say the numbers indicate a comeback for the burger giant.
Ongoing Struggles
Prior to its third-quarter 2015 results, McDonald’s hadn’t shown U.S. sales growth since 2013. The struggles faced by the chain stem largely from a loss of customers courtesy of the rise of trendier establishments like the Shake Shack and Chipotle. Concerns about the chain’s food quality and its use of antibiotics in its chickens also drove sales down. Complicating matters, many fast-food chains have absorbed growing labor expenses in the face of movements to hike wages and improve benefits.
Overcoming the Obstacles
Despite growing competition and labor expenses, McDonald’s managed to post third-quarter numbers that have analysts saying its rebound efforts are “paying off.” Global sales grew by 4% and stocks surged by 6% recently to reach an all-time high. The company has also managed to return an estimated $3.1 billion to shareholders through dividends and repurchases. Add to this the diluted earnings per share of $1.40, which is an increase of 28%, and it is clear McDonald’s is heading in the right direction, analysts say.
You Might Also Enjoy: 100 U.S. Dunkin’ Donuts Stores to Close
Staying the Course
While third-quarter results signal a comeback, McDonald’s still has many obstacles in its path. As wage increases continue to be embraced in states across the country, labor expenses are likely to keep rising for the chain as a whole. Competition continues to grow as well.
McDonald’s, however, is taking proactive measures to shine the tarnish off its brand name. The recent introduction of the all-day breakfast menu and a revamping of some of its recipes are beginning to make a difference in sales. The company has also promised to cut back on chickens raised on antibiotics and aims to go with cage-free birds entirely within a decade or so.
“We believe our turnaround plan is starting to generate the change needed to reposition McDonald’s as a modern, progressive burger company,” CEO Steve Easterbrook said in a statement. Third-quarter numbers seem to indicate that is so, but only time will tell if the measures are enough.
