McDonald’s (MCD) Earnings Snapshot: Same-Store Sales, Checks, and Cost Trends

• McDonald’s (MCD) is set to report their Q3 FY2025 earnings on Wednesday, November 5, before market open.
• Analyst consensus estimates call for an earnings per share (EPS) of $3.33 and revenue of $7.08 billion.
• Same-store sales, consumer loyalty, margins (particularly on beef), and forward guidance will be the most critical factors for MCD outside of EPS and revenue numbers.

This Year

McDonald’s has been subject to a very stagnant year in the market, currently trading up just under 3% year-to-date (YTD). The doldrums of this year have been driven by a decline in traffic at McDonald’s locations, especially among lower-income consumers.

McDonald’s has aimed to combat this decline in traffic and make themselves appealing to lower-income customers again through increasing their value offerings and promotional deals, to some moderate success. Q2 saw low single digit percentage increases in both global and domestic sales and triggered a bounce in share price.

Specifically, their nationwide $5 value meal and a plethora of movie tie-ins helped to stabilize visits and scale loyalty. As of Q2, about 70% of the company’s systemwide sales came from orders placed digitally via the mobile app or website, another indication that customers are eager to take advantage of their value offerings, which are usually only accessible through the app.

This Call

While core numbers and forward guidance will obviously be held in high regard this call, there are also a number of other factors that McDonald’s may touch on that could move shares.

The most notable among this group of variables is same-store sales. Declining same-store sales have been the driving factor in the company’s stagnating growth so far this year. Investors are eager to hear whether value meals and promotional items will continue to bring customers back, and where domestic sales lie when compared to international segments.

Additionally, consumer loyalty will be another major piece. Any updates on user engagement with the company’s mobile app and how loyalty is impacting the frequency of repeat customers could be big. It’s worth noting that the company will not give any details on how the Monopoly promotion has impacted loyalty or sales, as Q3 ended on September 30 and the promotion began on October 6.

Last among this nuanced bucket of factors is the company’s costs and margins, particularly as it pertains to beef inflation. Rising beef prices have been a serious headwind for McDonald’s, and any commentary on finding cheaper suppliers or other relief that could flow-through to restaurant margins would be big.

Beyond

McDonald’s is an American staple, and this call will by no means make or break the company; however, their stagnation is tough to ignore. While trading up almost 3% YTD sounds like a moderately successful year, this pace is far from outpacing the market, and when zooming out further, the picture changes: MCD is only up 1% since the start of 2024.

While McDonald’s has struggled to grow amid rising prices, they do seem to be finding some good footholds in their return to value. If these $5-style offers stick around and continue to drive traffic and build loyalty, there is a clear path back to growth for the company.

It’s also worth noting that the company’s international footprint only continues to grow, with same-store sales growth in Europe and China outpacing the same metric domestically in Q2. If international expansion could begin to offset domestic tightening into 2026 and beyond, there may be better years to come.

Gus Downingis host of the tastylive Network showRisk and Reward. @GainsByGus

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