New sandwiches fuel McDonald's sales

McDonald's profits have been driven by strong customer traffic around the world for products, such as the nasi lemak burger in Singapore. PHOTO: MCDONALD'S
McDonald's profits have been driven by strong customer traffic around the world for products, such as the nasi lemak burger in Singapore. PHOTO: MCDONALD'S

 

(REUTERS) - Upscale sandwiches and cheap drinks boosted earnings at the Golden Arches. McDonald's quarterly profit surged 28 per cent, easily beating analysts expectations. Sales were also a star. In the U.S., comparable store sales grew solidly.

Globally, strong customer traffic across all segements resulted in the biggest increase in existing store sales in more than five years.

The results drove McDonald's shares higher at the start of trading Tuesday.

RBC Capital Markets analyst David Palmer noted McDonald's strong cash flow, organic growth, and refranchising initiatives saying, "We believe this combination makes McDonald's a 'premium consumer staples company'."

Investors have been taking a liking again to McDonald's stock amid CEO Steve Easterbrook's turnaround drive, now into its second year. The stock is up nearly 25 per cent this year. Among the changes he has recently implemented: selling soft drinks of all sizes for $1 and sandwiches with artisan grilled chicken, using fresh instead of frozen beef, and cooking Quarter Pounders to order.