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McDonald’s profit rises as U.S. outlets beat expectations

General view of the outside of the McDonald's restaurant at the Anupam Complex, Saket, in New Delhi, India, in this file photo.

Simon de Trey-White/The Globe and Mail

McDonald's Corp reported an unexpected rise in sales in December at established U.S. restaurants, helping to lift its fourth-quarter profit above analysts' estimates.

The world's largest restaurant chain on Wednesday said sales at U.S. eateries open at least 13 months rose 0.9 per cent in December, compared with an average estimate compiled by Consensus Metrix calling for a 1.78 per cent drop in the month.

A push by the company to have more of its restaurants open on Christmas and a shift of the limited-time offering of its popular McRib sandwich to December, both helped boost U.S. sales during the month.

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But analysts said the early part of 2013 will be tough for the chain as it runs short of quick fixes for boosting U.S. sales that have been hurt by stiffer competition for customers who are pinching pennies in a weak economic recovery.

In fact, the company said it expected global same-restaurant sales to be down in January.

Net income at the world's biggest restaurant chain rose to $1.40-billion (U.S.), or $1.38 per share, from $1.38-billion, or $1.33 per share, a year earlier.

Analysts on average had forecast $1.33 a share, according to Thomson Reuters I/B/E/S.

Total sales rose 1.9 per cent to $6.95-billion.

McDonald's fourth-quarter global sales at restaurants open at least 13 months rose 0.1 per cent. Analysts on average had anticipated a 0.3 per cent decline, according to Consensus Metrix.

Fast-food chains like Burger King Worldwide Inc and Yum Brands Inc's Taco Bell have introduced new U.S. menus and are doing a better job of competing with McDonald's.

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At the same time, consumers have less money in their pockets since the end of the payroll tax cut.

"The limited agreement reached in Washington and the ending of the payroll tax holiday will do little to rejuvenate consumers' confidence and appetite for eating out. Restaurants should plan for a slow start in the new year," said Todd Hooper, a restaurant strategist at Kurt Salmon Associates.

McDonald's has the additional pressure of having to top its own strong results from last year, when unseasonably warm weather boosted fourth-quarter results.

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