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McDonald’s gets a big boost from higher prices, celebrities and chicken

bynewsdesk
October 28, 2021

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The company said Wednesday that in the three months ending Sept. 30, sales at global restaurants that have been open for at least 13 months were up 12.7% compared to the same period last year. Total revenue in the quarter increased about 14% to $6.2 billion compared to the third quarter last year, when revenues suffered from the pandemic.

Higher ingredient and labor costs, among other things, have prompted restaurants to raise prices. But so far, many customers don’t blink. McDonald’s reported that transactions – or the number of orders placed – in the quarter were positive compared to last year, and that the number of orders in the United States has increased.
The McDonald's BTS meal at a restaurant in Seoul, South Korea.

The company expects menu prices to be about 6% higher in 2021 compared to 2020, CEO Chris Kempczinski said during an analyst talk on its quarterly results Wednesday. The increase “has been fairly well received by customers so far,” he said.

McDonald’s also expects customers to continue to spend more per order, and not just because of higher prices.

During the pandemic, order sizes increased as people picked up food for groups, rather than just for themselves.

“If you get delivery, you get it for your family or at least a few people,” CFO Kevin Ozan said during Wednesday’s phone call. Early in the pandemic, McDonald’s expected those larger orders to decline as things returned to normal. But “we’re seeing those bigger order sizes continue,” Ozan said. “I think at least some of that will be stickier than we originally thought.”

chipotle (CMG), which has raised its prices this year, also reported a revenue spike in the third quarter.
McDonald’s (MCD) uses its famous Orders program, a limited edition series of meals featuring collaborations with music artists Saweetie, BTS, J Balvin and Travis Scott, to create buzz and entice customers. The Travis Scott meal, the first in the new platform, was so popular that after its launch last year, some locations ran out of ingredients used in the meal.
The program has also spawned a number of copy-cat meals. Burger King and others have since announced their own celebrity collaborations.
McDonald’s chicken sandwiches, which were introduced early this year, have also helped. “In the US, Crispy Chicken Sandwich sales continue to exceed expectations,” Kempczinski said during the call, adding that the product has helped McDonald’s increase its market share for chicken in the fast food sector. With the new sandwiches, the burger chain is responding to a trend that has helped boost sales at rivals like Popeyes.

Sources

1/ https://Google.com/

2/ https://www.cnn.com/2021/10/27/business/mcdonalds-earnings/index.html

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