McDonald’s Success Reflects Weakness in US Q3 Economy

McDonald’s Success Reflects Weakness in US Q3 Economy

McDonald’s on Thursday reported a jump in US comparable sales in the third quarter, offsetting declines in international markets amid strong demand for affordable food options in a weakened economy.

The fast-food giant said the US business benefited from larger group orders and improved dinner sales that made up for a drop in the number of customers.

McDonald’s also announced it was boosting its dividend.

The chain has said its US business was comparatively well positioned for the coronavirus pandemic because many of the restaurants have drive-through and pickup services, even if dining rooms are closed.

The company also have emphasized the affordability of its offerings amid elevated joblessness.

“Our third quarter performance demonstrates the underlying resilience of the McDonald’s brand,” said Chief Executive Chris Kempczinski.

“Our unique strengths, including our unrivaled drive-thru presence around the world, advanced delivery and digital capabilities and marketing scale have become even more important during the pandemic.”

US comparable sales rose 4.6 percent in the third quarter compared with the year-ago period, a big improvement after the 19.2 percent drop in the second quarter.

Global comparable sales declined 2.2 percent due to weakness in several large overseas markets, where sales dropped in China, in bigger European markets including France and Germany and in Latin America.

But sales were strong in Australia and Japan.

McDonald’s lifted its quarterly dividend by three percent to $1.29 per share.

Kempczinski said the dividend hike “reflects our strong financial position and represents continued confidence in our ability to drive profitable growth and long-term shareholder value.”

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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