McDonald’s (MCD.N) status as the world’s go-to meal means it’s competing with an uneven global economy as much as any rivals. The ubiquitous $190 billion fast-food purveyor on Monday touted a 9% year-over-year increase in worldwide same-store sales for the third quarter. In places like the U.S., that was helped by menu price increases. But the Big Mac seller also talked up the release of smaller, more affordable meals in markets facing worse economic fortunes, like China and Germany. In the latter, its McSmart menu of smaller meals helped drive the 10th quarter of double-digit sales growth. The company run by Christopher Kempczinski is striking a delicate balance.
In the U.S., the cost of food away from home grew 6% over the year to September, according to the Bureau of Labor Statistics, outpacing now-moderating food-at-home inflation. On a call with analysts, Kempczinski said that economic pressures are hurting low-income customers. But growth among higher-income consumers and bigger average checks picked up the slack. Meanwhile, worldwide, executives pointed to issues like relatively higher inflation in Europe, hammering a mantra of “affordable” or “affordability” 15 times on the call. That McDonald’s can selectively grow prices or shrink its offerings while upping both sales and operating profit shows that it occupies a unique sweet spot, even as it grapples with a global economy running at varying speeds between and within countries. (By Sharon Lam)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
