Higher traffic, U.S. initiatives help McDonald's global sales beat

REUTERS - McDonald's Corp posted the biggest rise in sales at established restaurants globally in five years, helped by higher traffic and the success of U.S. initiatives, including beverage promotions and the launch of signature crafted sandwiches.

Two years into a turnaround under Chief Executive Steve Easterbrook, McDonald's is trying to reverse declines in traffic at its U.S. restaurants - its biggest profit generator - through a slew of measures, including preparing Quarter Pounders with fresh beef and higher-end signature crafted sandwiches.

The fast-food giant has been selling soft drinks of all sizes for $1 since April and also launched a limited-time offer of McCafe beverages, which include frappes, smoothies and espresso drinks, for $2.

Both measures helped increase traffic and spending at McDonald's, with the sandwich launch persuading some lapsed customers to return and also drawing in new diners, Neil Saunders, managing director of GlobalData Retail said.

Global same-restaurant sales climbed 6.6 percent, helped by the strongest traffic in its restaurants in more than five years, beating the 4 percent growth estimated by analysts, the company said on Tuesday.

Sales at U.S. restaurants open at least 13 months rose 3.9 percent in the second quarter, beating the 3.2 percent increase analysts on average had expected, according to research firm Consensus Metrix.

Strong sales in China also boosted comparable sales in McDonald's high growth segment to 7 percent, almost double the 3.6 percent growth expected by analysts.

This came in contrast to sluggish results from the China operator of KFC, Pizza Hut and Taco Bell spun off from Yum Brands Inc.

Net income rose to $1.40 billion, or $1.70 per share, in the quarter ended June 30, from $1.09 billion, or $1.25 per share, a year earlier.

Excluding items, McDonald's earned a profit of $1.73 per share, beating the average analyst estimate of $1.62, according to Thomson Reuters I/B/E/S.

Revenue fell 3.4 percent to $6.05 billion, but beat analysts' average estimate of $5.96 billion.

McDonald's shares were up 2.7 percent at $156 in premarket trading.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sai Sachin Ravikumar and Martina D'Couto)