McDonald's reported higher-than-anticipated earnings and revenue for the third quarter, despite facing significant challenges related to same-store sales, which fell more than analysts had predicted due to weak traffic trends. The fast-food giant's adjusted earnings reached $3.23 per share for the September quarter, up from $3.19 in the previous year, surpassing the consensus estimate of $3.20.
Revenue rose by 3% to $6.87 billion, beating Wall Street's expectation of $6.82 billion. On a global scale, comparable sales decreased by 1.5%, a stark contrast to the 8.8% increase in the same quarter last year. Analysts anticipated a lesser decline of 0.5% for this metric. The Chief Executive, Chris Kempczinski, noted during the earnings call that the quick-service restaurant sector experienced significant slowdowns in many markets, characterized by traffic declines in several key areas, particularly among low-income consumers who are opting to dine at home more frequently.
This trend has persisted into the third quarter as traffic remained pressured, echoing the ongoing challenges across the industry. In the United States, same-store sales growth decelerated to 0.3%, down from 8.1% the previous year, with average check improvements only marginally offsetting a slight decline in guest counts.
Internationally, sales in operated markets fell by 2.1%, notably driven by weak performance in France and the UK. Additionally, same-store sales in international developmental licensed markets decreased by 3.5%, largely influenced by the ongoing conflict in the Middle East and downturns in China, which overshadowed gains made in Latin America. In response to recent concerns, McDonald's announced the reintroduction of its Quarter Pounder hamburgers in its restaurants, following the identification of slivered onions from Taylor Farms Colorado Springs facility as the likely sources of a recent E.
coli outbreak. Last week, health authorities reported that cases linked to the Quarter Pounder had surged to 75 across 13 states, leading to the temporary removal of the item from affected locations. Kempczinski indicated on the call that the outbreak did not significantly affect the company's third-quarter results and reiterated the 2023 financial outlook, excluding interest expenses, as the incident was not expected to materially impact the business, according to Chief Financial Officer Ian Borden’s insights during the analysts' discussion..