McDonald's mixed quarter: U.S. traffic dips, international keeps the lights on

What happened this quarter

Fewer visits stateside nudged U.S. same-store sales down 0.2%, but the fall was not as steep as Wall Street had penciled in. CEO Chris Kempczinski put it simply: "In the U.S., we're encouraged by improvement as the quarter progressed following our intervention on value."

International momentum carried the headline numbers. Companywide comparable sales increased 1.5%, beating forecasts, and net revenue edged up 1% to $7.16 billion. In the third quarter, net income totaled $2.49 billion, translating to $3.51 per share; the prior-year quarter showed $2.28 billion and $3.18 per share.

Stripping out restructuring costs and other items, earnings were $3.57 per share, topping the LSEG consensus of $3.38. The stock climbed about 5% in morning trading.

Why the U.S. slipped - and the fix underway

Management has leaned on deals to attract price sensitive diners and admitted the U.S. business lagged on executing those value offers. Same-store sales fell in July and August but turned positive again in September, CFO Ian Borden said. He also clarified he did not state that U.S. same-store sales would improve in the fourth quarter.

To revive domestic trends, marketing shifted toward Extra Value Meals, and the company restarted regional and national promotions in its app - a key channel for its most frequent customers.

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International momentum and new value tests

Overseas units did the heavy lifting. The international developmental licensed markets segment, which includes Japan and China, posted 4.2% same-store sales growth, beating StreetAccount's 2.1% expectation. The international operated division, home to markets like Australia and Germany, rose 1.4%, short of the 2.1% forecast. "In the majority of our large international markets, we're holding or gaining share," Borden said. "It's a soft consumer environment, but we're doing well."

France stood out as a weak spot. Franchisees there recently voted on a turnaround plan, and results have also been affected by a softer economy and short term disruptions tied to student protests.

Leaders said they are testing two value menu formats in the U.S. - one offering mix-and-match bundles and the other featuring set combos. The version that resonates most with customers and franchisees is slated for a nationwide rollout in early 2027.

What this means for your portfolio

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