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McDonald’s Q3 2018 Same-Store Sales Growth Beats Expectation

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Third-quarter SSSG

For the third quarter, McDonald’s (MCD) posted global SSSG (same-store sales growth) of 4.2%, outperforming analysts’ expectation of 3.6%. The company’s SSSG was positive across the segments with the comparable guest count rising in the top international markets. However, the comparable guest count declined in the United States.

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SSSG across segments

  • United States: For the third quarter, the US segment posted SSSG of 2.6%, which was in line with analysts’ expectations. The growth in average check size due to a favorable product mix and an increase in menu prices drove the segment’s SSSG. The expansion of delivery services to more restaurants, the implementation of self-order kiosks, the remodeling of restaurants, and menu innovations contributed to the segment’s SSSG.
  • International lead markets: This segment posted SSSG of 5.4% with strong performance in the United Kingdom, Australia, and France. SSSG was driven by the expansion of the deployment of EOTF (Experience of the Future) and delivery service. In Australia, the company introduced its all-day favorites platform, which helped drive sales.
  • High-growth markets: This segment posted SSSG of 4.6%, with most regions posting positive results. During the quarter, Italy and the Netherlands had double-digit SSSG. Growth in sales of dayparts drove SSSG in Italy.
  • Foundational markets: This segment posted SSSG of 6% with a strong performance in Japan.

Outlook

McDonald’s management continues to focus on improving customer experience through the implementation of EOTF, the expansion of delivery service, the remodeling of old restaurants, and menu innovations to drive sales. In September, the company expanded its $1, $2, and $3 menu offerings with the introduction of $1 any size coffee and two breakfast sandwiches for $1. The company also plans to launch a new classic meal deal option that features its core menu items at an affordable price.

Next, let’s look at McDonald’s EBIT (earnings before interest and tax) margins.

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