McDonald’s will reveal its earnings for the third quarter on Tuesday. Analysts expect mixed results, as McDonald’s continues to face challenges.
McDonald’s has temporarily reduced its sales in certain locations due to a recent E. coli contamination linked with the Quarter Pounder burger.
Centres for Disease Control and Prevention have identified slivered onion as a possible cause of the outbreak. However, the fresh beef patties from the chain were cleared.
McDonald’s is fighting a global slowdown in consumer spending, exacerbated by the inflationary pressures. Analysts predict only modest increases for its domestic sales.
What to expect in the upcoming fast food giant report.
Expectations of analysts for Q3 earnings
- LSEG surveyed analysts who expect McDonald’s to maintain its margins despite an outbreak. They anticipate a EPS of around $3.20.
- Sales growth initiatives in particular the US market are expected to support revenue forecasts of $6.82 billion.
McDonald’s launched a $5 combo meal in the US to appeal to value-conscious customers.
The move will likely result in a slight increase of 0.5% to the same-store sales on its home market. This should compensate for a decline in demand overseas.
According to StreetAccount, the same-store sales have declined by 0.6% due to a weaker demand internationally, particularly in Europe and Asia where inflationary pressures are affecting discretionary expenditure.
Update on E. coli outbreak: onions under review
McDonald’s removed its Quarter Pounder temporarily from the affected stores after the CDC connected the E. coli to slivered onion.
The health authorities have excluded fresh beef patties from the cause of the outbreak, but the 75 people affected and one person who died in the incident has had a negative impact on consumer confidence.
McDonald’s has reintroduced this item without onions in an attempt to restore consumer confidence and traffic.
McDonald’s shares have fallen by 6% in the wake of news about the outbreak. They are flat year-to-date despite ongoing challenges.
The performance of the fast food chain reflects investors cautious outlook in light of broader economic uncertainty.
McDonald’s’ response to the inflationary pressures was a focus on value offers, particularly in markets with high inflation like the US where consumers prefer lower priced meals.
Value-driven menus could counter a global weakened consumer demand, since inflation is pushing consumers to look for affordable dining options.
The post McDonald’s Q3 results today: Will E. coli impact revenue forecast? This post may change as the updates unfold
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