Home » McDonald’s reports 14 percent revenue growth as menu prices rise

McDonald’s reports 14 percent revenue growth as menu prices rise

McDonald’s, the global fast-food titan, reported a notable 14% revenue increase in the latest quarter, pushing its earnings to $6.69 billion, surpassing the $6.58 billion forecast by Refinitiv analysts. This growth is largely attributed to “strategic menu price increases,” a move that has drawn mixed reactions from consumers. The corporation’s net income saw an uptick, rising to $2.3 billion from last year’s $1.98 billion. Simultaneously, US same-store sales experienced an 8.1% growth, pointing back to the pricing adjustments.

McDonald’s reports 14 percent revenue growth as menu prices rise

Across various locations, the price hikes have been evident. A McDonald’s outlet in Darien, Conn., for instance, priced its Big Mac combo meal, inclusive of medium fries and a drink, at a staggering $18. In contrast, the same combo at a Times Square branch costs $13.69. This disparity in pricing across locations, however, remains undisclosed by the company. During a recent earnings call, CFO Ian Borden acknowledged the price hike in the US for Q3. While specific figures were not mentioned, Borden projected a menu price surge of just over 10% for the year, marking the second consecutive annual increase of this magnitude.

On the franchise front, McDonald’s recently announced an increase in royalty fees for new franchisees starting 2024. This move breaks a nearly 30-year tradition, raising the fee from 4% to 5%. This change, however, will not impact existing franchisees, unless they are acquiring company-owned restaurants or relocating.

In Q2, McDonald’s also exceeded Wall Street’s predictions, reporting a revenue of $6.5 billion. This success was partly fueled by the reintroduction of the McDonaldland character, Grimace, commemorating its 52nd birthday with limited-edition offerings. The campaign, dubbed “Grimace’s Birthday,” was labeled as “one of our most socially engaging campaigns of all time.”

Following this, there are plans to launch a spinoff chain of restaurants named CosMc’s in 2024, inspired by the McDonaldland universe. In a bid to streamline operations and foster quicker decision-making, McDonald’s laid off several corporate workers earlier this year. The company also implemented cuts in pay and benefits for some, aiming to consolidate its operations into a singular national structure.

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