McDonald's gains are increasing as inflation-weary customers flock to its restaurants

February 1, 2023: On Monday, McDonald’s stated that U.S. customers are visiting its restaurants more, which helps the fast-food company top Wall Street’s estimates for its last-quarter earnings and revenue.

Many consumers have slashed back restaurant spending in response to inflation. But McDonald’s has primarily benefitted from the change in consumer behaviour since many have traded down from complete-service restaurants to its Big Macs and McNuggets. It’s the next consecutive quarter that the firm noted traffic increases domestically, bucking the industry trend.

The fast-food company is anticipated that short-term inflation will continue in 2023, the CEO Chris Kempczinski states.

McDonald’s shares decreased by over 1% before the bell Tuesday.

The company reported a fourth-quarter net income of $1.9 billion, or $2.59 for every share, up from $1.64 billion or $2.18 per share before a year.

Net sales decreased by 1% to $5.93 billion but increased by 5% when stripping out foreign currency changes. All over the world, same-store sales increased 12.6% in the quarter, fueled by demand in the U.S. and its significant European markets.

In McDonald’s home need, higher menu costs and increased demand drove a few-store sales growth of 10.3%, topping StreetAccount estimates of 8.1%. The firm also noted the success of its McRib promotion, which labelled the limited-time item’s annual return as its “good-bye tour.”

In 2023, McDonald’s is announcing that it will open 1,900 new restaurants. More than 400 will be in the U.S. and internationally operated markets, while developmental licensees  will open the rest.

In January, the company stated that it would accelerate new restaurant improvement as part of a broader strategy shift. McDonald’s plans to add 100 more recent net restaurants than it anticipated for 2022.

The firm plans to use $2.2 billion and $2.4 billion on capital expenditures this year. Nearly half of those funds will be earmarked for new restaurant improvement in the U.S. and internationally operated markets.