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McDonald's Posts US Sales Increase for First Time Since 2013

  • Associated Press

CEO Steve Easterbrook has said he wants to transform McDonald's into a "modern, progressive burger company.''

CEO Steve Easterbrook has said he wants to transform McDonald's into a "modern, progressive burger company.''

McDonald's sales edged up at established U.S. locations during the third quarter, snapping a streak of about two years of quarterly declines.

The world's largest burger chain also said sales rose 4 percent on a global basis at established locations. In the U.S., the figure rose 0.9 percent. The last time the figure rose in the U.S. was for the third quarter of 2013.

The company also said it expected the sales figure to rise globally for the final three months of the year, including in the U.S.

Company shares jumped sharply and struck an all-time high in early trading.

For the period ending Sept. 30, McDonald's attributed the sales uptick in the U.S. to menu changes as it tries to win back customers and adapt to changing palates and preferences. McDonald's introduced a fried chicken sandwich and switched back to butter for its Egg McMuffins, instead of margarine.

Tweaks to food preparation included toasting its buns longer and searing burgers. McDonald's has also been simplifying its menu and announced plans to shift to cage-free eggs.

"Customers are noticing the differences,'' said CEO Steve Easterbrook, who took the helm in March.

In hopes of sparking a turnaround, Easterbrook is presiding over other big changes. Earlier this month, the company introduced "all-day breakfast'' in the U.S., meaning customers can get an Egg McMuffin whenever the craving strikes.

It is also making changes based on broader economics, like evaluating options to replace its Dollar Menu. The menu has been popular draw since it was introduced in 2002, but the company moved away from it as costs for ingredients such as beef and cheese have climbed and made it difficult for franchisees to make money.

McDonald's needs to make up lost ground. In the year-ago period, sales declined 3.3 percent at established U.S. locations as customer visits dropped. McDonald's has acknowledged that it failed to keep up with changing tastes and that service suffered as its menu mushroomed.

Easterbrook has said he wants to transform McDonald's into a "modern, progressive burger company.'' That has included a pay bump for workers at company-owned locations amid protests calling on McDonald's and others to give fast-food workers $15 an hour.

McDonald's said its operating income in the U.S. fell 1 percent during the quarter as a result of its pay hike and other benefits, but that the move would pay off with better performing restaurants.

For 2015, the company is also closing underperforming stores in the U.S. That is expected to mark the first contraction by locations since at least 1970, according to an Associated Press review of regulatory filings.

The company, based in Oak Brook, Illinois, has more than 36,000 locations around the world.

For the three months ended Sept. 30, the company said Australia and the United Kingdom delivered a strong performance. In China, where it was hit with supplier problems, McDonald's said its sales performance was "very strong.''

For the quarter, McDonald's Corp. earned $1.31 billion, or $1.40 per share, topping the $1.27 per share analysts expected.

Revenue was $6.62 billion, also above the $6.41 billion Wall Street expected, according to FactSet.

Shares jumped nearly 7 percent to $109.40.

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