McDonald's U.S. same-store sales top forecast on new deals, revamped stores

[July 26, 2019]  (Reuters) - McDonald's Corp <MCD.N> beat quarterly sales expectations at established U.S. restaurants on Friday, as the world's largest burger chain benefited from remodeled stores and new deals, including the 2 for $5 Mix and Match offer.

The company's stock, a component of the blue-chip Dow Jones Industrial index <.DJI>, rose 2% to $219.39 in early trading.

The U.S. restaurant market has been stagnant with lower customer traffic in recent years, dogged by increasing number of competitors among fast-food chains and the entry of delivery services such as DoorDash and Uber Eats, forcing established chains to find new ways of attracting and retaining customers.

McDonald's has been remodeling its 14,000 restaurants in the United States - its biggest market - by introducing digital ordering kiosks and new mobile order, pay and pickup services, trying to replicate the success of such upgrades in driving growth abroad.

The company has also tweaked its menu by offering national deals $1, $2, $3 Menu as well as greater variety of breakfast menus and switched many of its burgers to fresh-beef patties from frozen ones to woo diners in a saturated market.

The logo of a McDonald's Corp restaurant is seen oto in Los Angeles, California, U.S. October 24, 2017. REUTERS/Lucy Nicholson/File Ph

Sales at U.S. restaurants open for at least 13 months rose 5.7% in the second quarter ended June 30, above the 4.47% growth expected by analysts, according to IBES data from Refinitiv.

Total revenue, including both U.S. and overseas operations, was largely flat at $5.34 billion, as the company moves to franchised from owned restaurants, which replaces sales with royalties.

Still, McDonald's slightly exceeded expectations of $5.33 billion.

Net income rose 1.38% to $1.52 billion. Excluding one-time items, McDonald's earned $2.05 per share, meeting Wall Street expectations.

(Reporting by Aishwarya Venugopal and Nivedita Balu in Bengaluru; Editing by Tomasz Janowski)

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