McDonald's is attracting more affluent eaters
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McDonald's posted better-than-expected sales and profits, as it was able to offset a sales slowdown from lower-income customers in the U.S. with a larger share of more affluent diners.
Why it matters: Results from the largest U.S. fast food chain are consistent with the view that while many Americans are still willing to absorb price hikes, thanks to the strong U.S. job market, some are making adjustments to deal with the increased costs.
By the numbers: Profits jumped by a better-than-expected 17%, to $2.3 billion. Sales rose 14% to $6.69 billion.
- Same store sales rose 8.1% in the U.S. — the company's biggest market — thanks in part to "strategic menu price increases," the company said.
Yes, but: McDonald's execs said sales have slowed among customers with incomes of $45,000 or lower, which they've balanced out by coaxing better-paid eaters.
- "We continued to gain share with both the middle and higher income consumers," said McDonald's CFO Ian Borden on the company's post-earnings conference call.
- "We're certainly partly benefitting from the trade down from more expensive alternatives," he added.
