Shares of McDonald’s Up on Earnings Beat

Shares of McDonald’s rallied on Tuesday thanks to a third quarter earnings report that was better than had been expected, showing a strong international performance and higher spending for each customer across the U.S.

U.S. value deals, including a Dollar Menu that was revamped, helped attract customers, but larger tickets are proof that diners are willing to spend more.

Restaurant owners continue to look for more of an increase in traffic from the efforts the corporate headquarters is making in revitalizing restaurants.

However, the strong performance internationally encouraged many. Most international markets have made changes already that now are just being rolled out across the U.S.

Shares of McDonald’s were up over 6% on the news and finished Tuesday 6.31% higher.

McDonald’s posted adjusted earnings per share of $2.10 while analysts were expecting $1.99. Revenue ended the quarter at $5.37 billion while analysts are expecting $5.32 billion. Sales at same stores grew by 2.4% across the U.S. which were in line with Wall Street.

However, both revenue and earnings declined from the same period last year, as McDonald’s is refurbishing restaurants and adding on upgrades such as table service and self-ordering kiosks.

The company is also attempting to make improvements to the menu, which include adding hamburgers made of fresh beef and new coffee drinks, while partnering with Uber Eats for delivery as it attempts to bring lost customers back into the fold.

The upgrades have not boosted revenue and earnings at a sufficient rate to satisfy several franchisees. Twenty-five percent of its franchises operators held a meeting in early October and have considered coming together to push for more help and support from corporate headquarters.

Sales at McDonald’s that are going through these changes at the current time have typically fallen between 30% and 40% while the construction phase is in place.

McDonald’s overseas has already done most of the restaurant updates and its digital initiatives and the changes have paid off. Sales at same stores in the lead markets of Australia, France and the UK were up by 5.4% during the quarter, which was higher than the analyst expectations of 4.1%.

McDonald’s is renovating approximately 1,000 stores each quarter across the U.S. and is planning an expenditure of $1.6 billion in the U.S. during 2018 with most of the funds used for speeding up the pace of the remodels.

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