Value Meals Reestablish Affordability Edge, McDonald's Q4 U.S. Revenue Growth Hits Two-Year High

Stock News
Feb 12

McDonald's (MCD.US) achieved its fastest U.S. sales growth in over two years during the fourth quarter, as its value meals continued to attract cost-conscious consumers. Financial results showed McDonald's Q4 revenue reached $7 billion, a 9.5% year-over-year increase, surpassing expectations by $160 million. Adjusted earnings per share were $3.12, beating forecasts by $0.07. During the period, sales at existing U.S. McDonald's restaurants grew 6.8% compared to the prior year, which had been impacted by an E. coli outbreak affecting customer traffic. This growth rate exceeded expectations and marked the highest level since 2023. Profits excluding one-time items also surpassed average estimates, with comparable sales in both of the company's international divisions also outperforming forecasts. Regarding expansion, McDonald's stated the chain remains on track to reach its goal of 50,000 global restaurants by the end of 2027, with the pace of new restaurant openings accelerating. A key priority for McDonald's in recent quarters has been reestablishing its position as an affordable dining-out option amid post-pandemic price surges. The Q4 performance indicates these efforts—including offering more affordable menu items and value meals priced as low as $5—are paying off and helping the burger chain outperform competitors. CEO Chris Kempczinski stated in the company's Wednesday release that the focus on affordability helped improve Q4 customer traffic. The company noted that the average spend per order among U.S. customers also increased, thanks to "successful marketing campaigns." During the quarter, the company relaunched the popular "Monopoly" game and introduced a "Grinch"-themed meal. The Grinch meal performed exceptionally well, contributing to what the company called its highest single-day sales ever. On the company's earnings call, Kempczinski said McDonald's gained market share among lower-income consumers in December. CFO Ian Borden indicated the momentum from value meals continued into January. According to Jill McDonald, Global Chief Restaurant Experience Officer, McDonald's plans to introduce new beverages this year. Following the pilot of a small-format beverage concept called CosMc's, there has been external anticipation that the fast-food chain would refresh its drink offerings. A pre-tax charge of $80 million (approximately $0.09 per share) was related to restructuring costs as McDonald's seeks to "modernize ways of working" under its latest strategic plan. As a measure of profitability, the operating margin fell short of Wall Street expectations and declined compared to the previous quarter. Nevertheless, the results suggest McDonald's is gaining market share as consumers adjust their spending habits due to rising costs. Earlier this month, McDonald's rival Yum Brands reported better-than-expected sales, driven largely by strength at Taco Bell, which has gained popularity with its buzzworthy, low-priced menu items. In the fast-casual category, Chipotle Mexican Grill Inc. stated its core business was performing well early in 2026 until a winter storm disrupted operations across multiple states. The burrito chain provided a cautious full-year forecast.

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