McDonald’s Corp. is one of the first major restaurant chains to report this earnings season and offered a grim warning about inflation and consumers.
Same-store sales increased 9.7% in the second quarter versus a year ago. Wall Street analysts were expecting 7.5%, according to Bloomberg data. US store sales rose 3.7%, while analysts expected a 3% increase. Adjusted profit came in above estimates, at $2.55 a share, compared with an estimate of $2.46.
Price hikes and value offerings supported US sales growth.
“The McDonald’s System continues to demonstrate strength and resiliency,” CEO Chris Kempczinski said.
“Our second quarter performance reflects outstanding execution against our Accelerating the Arches strategy. By focusing on our customers and crew, enabled by a rapidly growing digital capability, we delivered global comparable sales growth of nearly 10%.”
Despite beating on sales due to price hikes and value menu items, McDonald’s said inflationary pressures would continue to impact margins for the remainder of the year due to the souring macroeconomic conditions.
McDonald’s executive said wage inflation and higher energy costs are impacting margins. The executive said food and paper costs are up 12-14% for the year and warned that macro uncertainty has increased over the year’s first half.
*MCDONALD'S SAYS US LABOR INFLATION IS ABOUT 10% NOW
*MCDONALD'S SEES US FOOD AND PAPER COSTS UP 12%-14% IN 2022
— *Walter Bloomberg (@DeItaone) July 26, 2022