McDonald's Impressive First Quarter Earnings

The fast food giant has posted better than expected earnings indicating the sustainability of the turnaround

For the consecutive third time, McDonald’s Corporation posted better than expected earnings highlighting that the turnaround which starts last year is manageable.

During the last year’s third quarter, the traits of the turnaround began to surface when the Golden Arches posted increase in same-store sale in two years and now it is evident that the CEO Steve Easterbrook will be able to put the company on the tracks of the profitable business.

Mr. Easterbrook has joined the company just a year ago and he pushed the organization to accelerate its operations, make improvement in the food, and simplify the menu. Back in October, when the company introduced “All-Day Breakfast Menu,” –one of the biggest menu change in years –then the analysts and the company too predicted the demand for the Egg Muffins to gradually diminish but contrary to the company’s beliefs the demand is still boosting the sales.

The CEO cited that it is not only the change in the menu which has made the turnaround of the company possible but the right strategies have also played a major role in generating favorable results of the company. The strategies included speeding up the service of the drive-through and improving the accuracy of the order. He added that the management team also look through the apparent minute detail in order to increase the overall efficiency which included enlarging the font size on order ticket so that the staff may clearly read consumer’s special orders.

Mr. Easterbrook also indicated that the staff’s higher wages at the outlets operated by the company along with the tuition assistance to all the workers transferred into employee low turnover which collaterally turn into better customer service. The Oak Brook, Illinois based organization is also training its employees to deliver faster. It is also motivating employees to offer a friendlier service to the employees.

On Friday, the CEO informed the investors that in the U.S., the customers are noticing visible difference. He said that the customer satisfaction went up by 6% in comparison with the prior year’s same period. The organization has introduced multiple offers for the customers including its two for $2 menu earlier this year, in January. The offering couldn’t generate much revenue for the company and afterwards it introduced two for $5 which proved to be another trigger for increasing the sales in the first quarter. But the analysts have cautioned that the menu offering is not same throughout the entire outlets as some markets are offering the deal for 2 for $4 and 2 for $3.5 while at several locations, the menu includes the breakfast items.

At the U.S. outlets –opened for more than a year –the sales went up by 5.4% outperforming the growth of 4.6% and went slightly down in comparison with the last year’s 5.7%. In the Chinese market, where the company has struggled, the fast food giant was able to have better than expected growth, during the first quarter. Across the world, the same-store sales jumped 6.2%.

Mr. Easterbrook cited that later this year, the largest fast food chain will focus on a long-term strategic plan which will not let the company’s growth to falter.