US market today: McDonald's focus on value, big new burger drive sales in first quarter

McDonald's posted better-than-expected sales in the first quarter as a new burger - and a continuing emphasis on value - brought in customers.

The company said its global same-store sales, or sales at locations open at least a year, rose 3.8 per cent in the January-March period. That was better than the 3.7 per cent increase Wall Street was expecting, according to analysts polled by FactSet.

McDonald's shares rose more than 3 per cent before the opening bell Thursday.


The limited-time Big Arch burger -- a 1,020-calorie behemoth that went on sale in the US last month - became a viral sensation after McDonald's CEO Chris Kempczinski posted a video of himself taking a nibble from one.

Kempczinski was mocked for his tentative bite. Tom Curtis, president of rival Burger King, posted his own video taking a vigorous bite of his chain's new Whopper.

But the Big Arch did capture peoples' attention. McDonald's said US customers spent more per visit in the first quarter than the same period a year ago. The Big Arch costs well over USD 8 in many locations.

At the same time, McDonald's is emphasising value to attract inflation-weary customers in the US and abroad. The company cut prices on some US combo meals in September, and Kempczinski said in February that those changes, along with other discounts, helped McDonald's gain share among consumers with household incomes of USD 45,000 or less. That's a segment that had been drifting away from McDonald's for several years.

McDonald's has been leaning even more heavily into deals as gasoline prices rise due to the Iran war. Starting April 21, McDonald's US stores began offering 10 items that each cost less than USD 3.

The Chicago chain said its revenue rose 9 per cent in the first quarter to USD 6.52 billion. That was also higher than the USD 6.47 billion Wall Street was expecting, according to FactSet.

McDonald's net income rose 6 per cent to USD 1.98 billion. Adjusted for one-time items, the company earned USD 2.83 per share. That was also higher than analysts' forecast of USD 2.74.