McDonald's Profit Rises, Refranchising Drive Dents Revenue

By Ezequiel Minaya 

McDonald's Corp. reported revenue sank in its latest quarter while profit rose, driven by strong sales in its established locations.

The burger and fast-food restaurant chain said comparable sales -- which track transactions in restaurants opened at least 13 months -- rose 6%, the ninth quarter in a row the key metric has advanced and better than the 4.6% growth predicted by FactSet analysts. In the U.S., comparable sales rose 4.1%, better than the 3.6% expected by analysts.

Overall revenue for the third quarter fell 10% to $5.75 billion as McDonald's carries out a plan to turn more corporate-owned stores into franchised locations. Analysts surveyed by Thomson Reuters had expected $5.74 billion in sales.

Chief Financial Officer Kevin Ozan said the company refranchised its businesses in China and Hong Kong during the quarter, reaching its target to refranchise 4,000 restaurants more than a year ahead of schedule.

The move "brings us closer to the customers and communities we serve in these markets and creates a better opportunity to unlock their full growth potential," Mr. Ozan said.

For the period, profit climbed 48% to $1.88 billion, or $2.32 per share, up from $1.50 per share a year ago. Adjusted earnings on a per-share basis were $1.76, a penny less than expected by analysts.

The company has targeted delivery as a growth opportunity. The chain has offered delivery in Asia and the Middle East for several years and has been testing delivery in the U.S. with UberEATS since January. In July, McDonald's expanded delivery to 13 countries, including 3,500 restaurants in the U.S.

McDonald's during the quarter also rolled out new coffee products, including an Americano and a Caramel Macchiato, in hopes of poaching Starbucks customers.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

October 24, 2017 09:39 ET (13:39 GMT)

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