McDonald's says turnaround taking hold as sales rebound

By Lisa Baertlein and Yashaswini Swamynathan

REUTERS - McDonald's Corp reported its first rise in quarterly global same-restaurant sales in more than a year and said the trend would continue in the current quarter as Chief Executive Steve Easterbrook's turnaround plan begins to takes hold.

Shares of the world's biggest restaurant chain by sales jumped more than 8 percent in early trading, as a renewed focus on value helped business around the world.

Global sales at established restaurants rose a much better- than-expected 4 percent in the third quarter, ending six straight quarters of flat or falling results.

"While still in the early stages, we believe our turnaround plan is starting to generate the change needed to reposition McDonald's as a modern, progressive burger company," Easterbrook said in a statement.

The United States, McDonald's top profit market, reported a surprise 0.9 percent increase in sales at restaurants open at least 13 months. McDonald's said breakfast items and its new Premium Buttermilk Crispy Chicken Deluxe sandwich helped the division break a two-year streak of quarterly sales declines.

A focus on value and breakfast helped results from China, where sales plummeted after a food safety scandal in July 2014.

Australia, the United Kingdom and Canada also contributed to the quarterly rise in sales at restaurants open at least 13 months, after McDonald's tweaked menus, improved service and refined its value offerings.

Easterbrook took the helm in March and has announced plans to speed-up service, simplifying menus and boost food quality.

In the United States, he has rolled out all-day breakfast, begun switching to chicken from birds raised without important antibiotics and raised wages for workers in restaurants run by the corporation.

The jury is still out on such initiatives.

McDonald's said winning back customers remains a top priority in the United States, where competition is fierce and speed is key.

All-day breakfast, launched Oct. 6, is part of that effort.

While that move appears to have boosted traffic, some domestic franchisees complain that all-day breakfast and the company's plans to customize sandwiches is complicating operations and slowing service.

McDonald's also said its decision to raise wages and improve benefits for 90,000 workers in U.S. company-operated restaurants took a bite out of operating income.

Third-quarter net income was up 23 percent to $1.31 billion, or $1.40 per share. Revenue fell 5 percent to $6.62 billion.

McDonald's shares hit a high of $110.88 before retreating to $108.69 in early trading.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva and Meredith Mazzilli)