McDonald’s is grinning thanks to Grimace after a marketing campaign to celebrate the “birthday” of its big purple mascot went viral and contributed to surprisingly strong second quarter sales.
Global same-store sales, or sales at stores open at least a year, rose nearly 12% in the April-June period. That handily beat Wall Street’s forecast of a 9.4% increase, according to analysts polled by FactSet.
The Grimace campaign, which featured a limited-time purple milkshake, took on a life of its own after fans posted videos of themselves drinking the milkshake and then ending up on the ground in a messy pool of purple, or having some sort of seemingly paranormal experience. One TikTok video showing a teen drinking one in his car and then disappearing in a milkshake explosion. That video garnered more than 5 million “likes.”
Revenue rose 14% to $6.5 billion, the Chicago chain said Thursday. That was also ahead of analyst expectations for $6.3 billion.
Same-store sales in the U.S. more than doubled, rising 10.3% in the quarter compared with a 3.7% rise a year earlier.
Price hikes on some items in the U.S. did not dent customer traffic, the company said. Sales in the U.K., Germany and China were also strong.
Net income nearly doubled to $2.3 billion for the quarter. Excluding one-time items, the company earned $3.17 per share, which beat analysts forecasts of $2.78.
Among those one-time items was an $18 million charge for restructuring costs, which follows $180 million in restructuring costs posted in the first quarter. McDonald’s laid off several hundred corporate workers in early April in an effort to speed up innovation and decision-making.
The company declined to say how layoffs have affected headcount at its Fulton Market headquarters, as well as whether its restructuring strategy would alter plans to relocate its innovation center, called Speedee Labs, downtown from suburban Romeoville.
McDonald’s and other restaurants have had to balance their own rising costs and how much they can lean on customers to help cover them, but CEO Chris Kempczinsk said in a prepared statement that the company is continuing to invest in the brand and get customers what they want.
That includes connecting with customers through the McDonald’s app.
“On the digital front, McDonald’s digital investments have made its app much easier to use and have increased convenience for the consumer,” said Neil Saunders, managing director of GlobalData. “This has paid big dividends in terms of increasing the number of both impulse and planned meal purchases.”
In an earnings call Thursday, Kempczkinski said McDonald’s planned to test out a small-format store concept called CosMc’s, which he described as a “small-format concept with all the DNA of McDonald’s but its own unique personality.”
More information about CosMc’s would be available at an investor day at the end of the year, he said; McDonald’s will begin testing the format early next year.
Kempczinski said the company would also share more details about expansion plans later in the year.
“In the U.S., we haven’t grown units going all the way back to 2014,” he said.
Kempczinski said the fast food giant’s U.S. footprint reflects what the country’s population profile looked like “20 or 30 years ago.”
“Imagine the amount of shifts that have happened,” he said. “People moving to the South, to the Southeast. That isn’t reflected in our footprint.”
Shares climbed more than 2% before the market opened Thursday.
Chicago Tribune reporter Talia Soglin contributed.
