McDonald's (MCD) is expected to report its first-quarter 2022 earnings results on Thursday before market open, as the restaurant industry at-large and consumers alike face the impact of inflation, while the Golden Arches hones in on growing its digital presence and marketing innovation like menu hacks and offerings.
Here's what Wall Street is expecting, according to Bloomberg consensus estimates:
Revenue: $5.57 billion expected
Adj. earnings per share (EPS): $2.17 expected
U.S. same-store sales: 3.59% expected
Global same-store sales: 15.63% expected
During the past quarter, which ended March 31st, 2022, the Chicago-based company faced the impact of the Omicron variant and its toll on foot traffic.
In a recent note to investors, Peter Saleh of BTIG said a potential downside scenario for the fast food giant could be renewed or prolonged sales disruption from the coronavirus in some markets, weighing on sales throughout 2022 and taking a toll of franchise owners. BTIG has an a buy rating on shares of McDonald's with a price target of $280, down from $295 on slower growth in international same-store sales as a result of the war in Ukraine.
To boost sales during the pandemic, the restaurant chain heavily invested in its growth strategy, including the three ‘D’s:’ digital, delivery and drive-thru via its "Restaurant Experience of the Future" campaign, which features ordering kiosks, in-app ordering, and table service. Saleh notes, however, another possible downside for the company could be a reduction in capital spending having an impact on long-term competitiveness and sales.
Global trends are also a top concern for McDonald's and the fast food industry at-large. In a recent note, Nick Setyan of Wedbush told investors the firm is awaiting "further clarity" on global same-store-sales regarding the impact of Russia and Ukraine. Wedbush has an Outperform rating on shares of the company with a price target of $270.
This past quarter, McDonald's set a precedent for the fast food industry with creative marketing efforts that required little to no menu changes or additions. Back in January, the company unveiled 'menu hacks' that provided customers with a four 'hacked' menu items, including the Hash Brown McMuffin, a Crunchy Double, a Surf + Turf, and a Land, Air & Sea, all of which are made with menu items that were already available.
In an effort to get customers to use McDonald's app and McDelivery, the company offered a free medium world famous fries and soft drink with any a Surf + Turf order, in addition to other digital-only promotions.
Restaurant Brands International's (QSR) Burger King followed suit, with free fries promotion on the Royal Perks app throughout 2022.
According to data intelligence platform Placer.ai, McDonald's saw a rough start to foot traffic in the beginning of the quarter but finished strong. In January and early February, visits were significantly below 2019 levels. However during the week of February 28, visits were up 3.8% compared to 2019.
Shares of McDonald's are up 7% compared to a year ago.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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