McDonald’s Relies on Price-Cutting Push to Keep Sales on Track

• January 30 2018
• Leslie Patton

For McDonald’s Corp. customers, price matters.

For McDonald’s Corp. customers, price matters.

To maintain U.S. sales, the world’s largest restaurant chain is increasingly relying on a discounting push that’s included drink specials and sandwich promotions. That effort helped domestic same-store sales climb 4.5 percent in the latest quarter, matching analysts’ estimates.

The question now is how long McDonald’s can fuel growth by appealing to Americans’ penny-pinching instincts -- especially as competitors fight back. Taco Bell and other rivals are rolling out their own items for as little as $1, making the fast-food industry even more cutthroat.

“We are confident that we will accelerate our momentum by capitalizing on our strong business model,” Chief Executive Officer Steve Easterbrook said in a statement Tuesday. That includes touting convenience, menu variety and affordable prices, he said.

McDonald’s shares were little changed in the wake of the results, a sign that investors are waiting to see how the battle plays out. The stock had been up 3.3 percent this year through Monday’s close.

On the bright side, McDonald’s profit handily beat analysts’ estimates. Excluding some items, earnings came in at $1.71 a share, compared with the $1.59 estimate.