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MarketScreener Homepage  >  Equities  >  Nyse  >  McDonald's Corporation    MCD


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McDonald's Boosts Sales With Faster Drive-Throughs and Travis Scott

10/08/2020 | 08:15am EST

By Heather Haddon and Micah Maidenberg

McDonald's Corp. said its U.S. sales have bounced back from the initial shock of the coronavirus pandemic, thanks to sped-up drive-throughs and a meal promotion with musician Travis Scott.

The burger giant said Thursday that comparable sales at U.S. restaurants rose 4.6% in the three months ending in September compared with the same period last year. In the preceding quarter, U.S. sales by that metric were down 8.7% from a year earlier, as the chain shut dining rooms and people stayed home.

It remains to be seen whether the sales growth will translate into more profit. McDonald's didn't release profit figures for the quarter. The company is expected to release full results for the period Nov. 9.

McDonald's has struggled in recent years to boost sales in its home market. The chain has experienced rising competition, particularly at breakfast. Efforts including all-day breakfast and burgers with customizable toppings boosted U.S. sales, but they later fell again.

Operational changes and new marketing in recent months have given the chain momentum, McDonald's said. The company attributed the third-quarter sales growth to the partnership with Mr. Scott and a reduction in average wait times at drive-throughs, which it has long sought to improve. McDonald's said a simpler menu during the pandemic and the closure of most dining rooms increased labor efficiency and helped drive-throughs operate faster.

In recent weeks, McDonald's has mixed up its menu and marketing as it seeks to regain ground in particular with younger customers.

The chain said Wednesday that it was adding sweet breakfast pastries such as blueberry muffins and apple fritters to stores on Oct. 28, the first bakery additions to its standard menu in eight years. Last month, it introduced spicy McNuggets, the first flavor for that item since they were introduced to U.S. menus in 1983, the chain said.

On Monday, McDonald's added a marketing deal with reggaeton artist J Balvin, with a meal of a Big Mac, fries and an Oreo McFlurry bearing the musician's name on sale through Nov. 1. It didn't set a standard price for that celebrity meal, saying it would vary.

Mr. Scott was the first celebrity to be featured on the menu since basketball icon Michael Jordan, who lent his name to a McJordan meal in 1992.

"We've been pushing ourselves recently to go beyond our traditional comfort zone," said Morgan Flatley, McDonald's U.S. chief marketing officer, in response to questions about the campaign.

The individual items in the Travis Scott meal--a Quarter Pounder with cheese, lettuce and bacon, fries with barbecue sauce and a Sprite--was on sale for about a month ending Oct. 4.

Mr. Travis--a hip-hop artist with a knack for partnering with big consumer companies, including General Mills Inc., Nike Inc. and Epic Games' "Fortnite"--released a new single, "Franchise," and video featuring a man wearing a McDonald's hat and T-shirt. The song made its debut on the top of Billboard magazine's Hot 100 this week.

"Billions and billions served," Mr. Scott wrote on a recent Instagram post that included a photo of him eating a McDonald's sandwich next to a worker at a fry station.

One Ohio restaurant manager said the restaurant's kitchen was overwhelmed at times by demand for the Travis Scott meal. Some customers played Mr. Scott's music at the drive-up speaker or asked for a "Fortnite burger."

"I was thinking of it as a Happy Meal for grown-ups," said Adam Yescas, a 33-year-old in Fresno, Calif. who ordered the meal and got a branded Travis Scott doll from the chain

Downloads of the McDonald's app increased 20% from Sept. 15 to Sept. 30--part of which the meal was only available at a discount through digital purchases--compared with two weeks earlier, according to App Annie, a third-party analytics firm.

"I like the dark tones of his music and the energy he brings to the stage," Christianson Daniels, a 20-year-old in Wilkes-Barre, Pa., who ordered the meal last month, said of Mr. Scott. "That was enough to bring me into the door. But the meal itself? Eh."

Write to Heather Haddon at heather.haddon@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

10-08-20 0814ET

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Financials (USD)
Sales 2020 19 335 M - -
Net income 2020 4 760 M - -
Net Debt 2020 33 603 M - -
P/E ratio 2020 34,7x
Yield 2020 2,30%
Capitalization 163 B 163 B -
EV / Sales 2020 10,2x
EV / Sales 2021 8,87x
Nbr of Employees 205 000
Free-Float 44,8%
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Technical analysis trends MCDONALD'S CORPORATION
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Mean consensus BUY
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Average target price 240,55 $
Last Close Price 219,34 $
Spread / Highest target 20,8%
Spread / Average Target 9,67%
Spread / Lowest Target -1,98%
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Christopher Kempczinski President, Chief Executive Officer & Director
Enrique Hernandez Independent Chairman
James R. Sappington Executive VP-Operations & Technology Systems
Kevin M. Ozan Chief Financial Officer & Executive Vice President
Daniel Henry Global Chief Information Officer & Executive VP
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