McDonald's (MCD) on Thursday reported fiscal first-quarter earnings that topped Wall Street's expectations, with the fast food giant posting sales that rebounded to pre-COVID levels amid the battle of chicken sandwiches, and the industry's growing digital shift.
Here's what the Golden Arches reported, compared to Wall Street’s expectations, according to a Bloomberg consensus estimate:
Revenue: $5.12 billion versus $5.03 billion expected
Adj. earnings per share (EPS): $1.92 versus $1.81 expected
U.S. same-store sales: 13.6% versus 9.23% expected
Global same-store sales: 7.5% versus 4.94% expected
McDonald's president and CEO Chris Kempczinski touted the company's rebound, pointing out that sales hit their highest levels in at least two years, even as COVID-19 restrictions persist globally.
"Our teams around the world are focused on executing our Accelerating the Arches strategy at the highest level," an initiative focused on doubling down on digital, drive-thru and delivery," he said in a statement.
In the U.S., comparable sales benefitted from the an uptick in the average check size, growth in delivery and digital, and national menu and marketing offerings.
The outlook for 2021 is also fairly bright, with McDonald's expecting to spend over $1 billion dollars in the United States — allocating $500 million to modernize over 1,200 restaurants. Worldwide, the Golden Arches also plans to open more than 1,300 restaurants.
Although the company plans to shutter 325 U.S. locations, most of them in Walmart outlets, McDonald's expects around 650 net restaurant additions this year.
The fast-food giant raised its systemwide sales growth outlook for 2021 from low double digits to the mid-teens, and expects restaurant expansion to contribute to 1 percent of that 2021 systemwide sales growth.
Menu updates everywhere
McDonald's has had a busy quarter featuring a flurry of new initiatives, including its foray into the chicken sandwich wars. And like other fast food giants, the company is positioning itself for life after coronavirus lockdowns by using digital app deals to spur loyalty — especially as indoor dining remains restricted.
"There may not be a brand better positioned to enjoy the unique post-COVID environment than McDonald’s," Placer.ai wrote in a new report.
The foot traffic analytics firm found that the fast food chain's weekly visits in 2021 during March and early April had fallen versus a year ago, but were still "far better than January and February respectively." During those months, visits were down over 30 percent each week on average.
However, breakfast —a "big piece of the brand's puzzle," according to Placer.ai — has taken a hit. Americans are slowly returning to the office as mass vaccination efforts pick up speed, but there seems to be a glimpse of hope among fellow fast casual restaurant leaders like Starbucks (SBUX), and others.
"Visits in the mornings are still down from the 8.1% seen in April 2019, when compared with the same periods in 2020 and 2021, Ethan Chernofsky, VP Marketing at Placer.ai noted in the blog post. "This number is trending back to normalcy, indicating that the return of routines is taking place."
However, McDonald's digital deals are a linchpin for the company to lure in foot traffic. On Tuesday, the company announced plans for a free McFlurry on the app on May 4th "for anyone who has ever mistaken the McFlurry spoon for a straw."
In a recent note from Wells Fargo, analysts acknowledged the uptick of interest on the app, mostly associated with the debut of its new crispy chicken sandwich.
"New product news, particularly at McDonald's, was enough to keep aggregate weekly app usage above fourth-quarter levels," the bank noted.
"Deal activity ramped as it launched the new chicken sandwich platform nationally on February 24th, demonstrating the brand's multi-pronged approach to marketing and its ability to draw in more customers to its digital platform using new products ahead of the brand's national loyalty launch in the second half of 2021," it added.
John Ivankoe of J.P. Morgan, which remains "Overweight" the stock, called the Golden Arches a "a long-term core holding in the restaurant space for relatively low risk and solid absolute return," in a recent note.
Shares of McDonald's, which closed lower on Wednesday at $232.41 per share, dipped modestly in pre-market action on Thursday.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].