NEW YORK – A big jump in overseas and U.S. sales boosted McDonald's Corp.'s third-quarter profit by 11 percent, the company said Wednesday, a result that handily beat Wall Street's expectations.
Oak Brook, Ill.-based McDonald's said net income for the quarter ended Sept. 30 rose to $1.19 billion, or $1.05 per share, from $1.07 billion, or 89 cents per share, a year earlier. According to a poll by Thomson Reuters, analysts expected profit of 98 cents per share.
Operating costs, a sore point for many restaurant companies due to year-over-year increases in commodity costs, rose just 2 percent for the quarter.
Revenue, meanwhile, grew 6 percent to $6.27 billion from $5.9 billion. Analysts predicted revenue of $6.18 billion.
The revenue and profit growth was largely fueled by an increase in same-store sales, or sales at locations open at least a year. Global same-store sales jumped 7.1 percent while U.S. same-store sales rose 4.7 percent. Same-store sales in both Europe and the Asia-Pacific, Middle East and Africa regions grew by about 8 percent as well.
The sales increases came as consumer anxiety about the economy took a turn for the worse due to the failure of some of the nation's biggest banks, declines in the stock market and talk that a prolonged recession could be around the corner. After consumers restricted their spending this summer to deal with high gas prices and the downturn in the housing market, spending slowed even more in early fall with consumers increasingly cutting back even on smaller luxuries like eating out.
Fast-food sales have been holding up well, though, because the chains offer lower prices than other sit-down restaurants. McDonald's, in particular, has been able to cash in on the economic downturn due to its Dollar Menu and the popularity of its sandwiches and drinks.
Chief Executive Jim Skinner said in a statement that the strong sales were continuing into the fourth quarter.
"As we enter the final quarter of the year, October sales trends remain strong and I am optimistic about McDonald's outlook," Skinner said.
Shares rose 47 cents to $55.60 in electronic pre-market trading. The stock closed at $55.13 Tuesday.