Coverage: McDonald’s new strategy produces results

The ubiquitous McDonald’s Corp. posted first-quarter results on Friday morning that continued to show consumers’ appetite for fast food.

Hadley Malcolm of USA Today had the day’s news:

McDonald’s has been experimenting with different menu offerings, including various sizes of its products and different value combinations. It announced earlier this week that it has started testing both a supersize and a miniature version of its classic Big Mac in Ohio and Dallas. It phased out its famous dollar menu in favor of what it calls McPick 2, where customers can get two items for $2, and has also been going head-to-head with Taco Bell competing for breakfast customers.

Those moves are all part of a plan to turn McDonald’s into a modern burger company, announced under CEO Steve Easterbrook last year. And they appear to be working. Same-store sales in the U.S., a measure of sales at stores open at least a year, increased 5.4% on the popularity of the all-day breakfast menu and McPick 2, the company said in its first quarter earnings report Friday.

“McDonald’s brand and business is built on offering delicious food and beverages through unmatched convenience and compelling value,” Easterbrook said in a company statement. “The turnaround plan we announced last year is grounded in enhancing these critical customer-driven elements, and I’m pleased to report that our turnaround is taking hold.”

McDonald’s said it plans to continue enhancing the menu and simplifying operations to win over customers. The fast food industry faces extreme headwinds in the fight for Americans’ wallets as public opinion has swayed against processed and unnatural food.

Yashaswini Swamynathan of Reuters focused on the promotions that have boosted sales:

Sales at U.S. restaurants open for at least 13 months rose 5.4 percent in the first quarter. Analysts on average had expected a rise of 4.6 percent, according to research firm Consensus Metrix.

McDonald’s All-Day Breakfast program, launched in October under new Chief Executive Steve Easterbrook, has been a hit with U.S. customers looking for cheaper options.

The company also found many takers for its McPick 2 promotional offer, under which a customer could pick any two items from a menu that included its Big Mac burger and Quarter Pounder with Cheese burger for $5.

The popularity of the all-day breakfast concept has increased customer traffic to McDonald’s outlets, boosting sales of its non-breakfast offerings, Trefis analysts wrote in a note on Thursday, citing data from research firm NPD Inc.

Sam Ro of Yahoo Finance focused on what breakfast food means to McDonald’s:

McDonald’s fans’ wish for breakfast served all day came true last fall. While this has been disruptive for the competition (and some franchisees), it has been a hit with customers. And McDonald’s numbers show it.

Overall, the company reported Q1 net revenue of $5.9 billion and earnings of $1.23 per share, which both beat expectations.

“The turnaround plan we announced last year is grounded in enhancing these critical customer-driven elements, and I’m pleased to report that our turnaround is taking hold,” CEO Steve Easterbrook said. “For the quarter, we generated higher sales, revenues and operating income in constant currencies across all business segments.”

Global comparable store sales increased by 6.2%. Management notes that there was some benefit from the additional day due to leap year. International store growth was led by gains in the UK, Australia, and Canada. So-called “high growth” markets including China and Russia saw comparable sales grow 3.6%.