McDonald’s earnings surge as inflation-squeezed consumers seek value

NEW YORK (AFP): McDonald’s reported a blowout second quarter of worldwide revenue growth that the fast food chain said reflected its value proposition as inflation remains high.

“We’re winning on value,” McDonald’s chief executive Chris Kempczinski told analysts on a conference call.

The company’s profits nearly doubled to $2.3 billion for the quarter, while revenues rose 14 percent to $6.5 billion.

While McDonald’s has itself raised prices significantly over the last year, executives said it was attracting “trade down” customers who would normally go to pricier rivals.

In its home market of the United States, the chain is drawing more consumers who earn over $100,000 annually, offsetting the hit from somewhat smaller orders by those making less than $45,000, Kempczinski said.

“There is certainly concern with the US consumer… but our value position has put us in a good position,” he said.

The current dynamic is “very consistent” with the trend in how consumers have reacted to inflation in recent quarters, said chief financial officer Ian Frederick Borden.

“We’re not seeing any further deterioration,” he said.

Borden said McDonald’s continues to see cost pressures in food and paper prices, as well as in labor costs.

McDonald’s scored global comparable sales growth of 11.7 percent from a year ago, with all three of its operating regions enjoying double-digit growth.

US comparable sales jumped 10.3 percent. An earnings press release also highlighted especially robust gains in China, Britain and Germany.

The company’s shares rose 2.3 percent to $298.36 in morning trading.