We are not math geniuses, but more and more people paying less and less isn't the long-term winning formula franchisees are after.
— Jason Clampet
McDonald’s Corp. is seeing a jump in customers, a sign its new Dollar Menu is attracting penny pinchers.
McDonald’s share of U.S. traffic among fast-food and fast-casual restaurants rose to almost 18 percent in the week ended Jan. 21, an increase of about 0.4 percentage point from a year earlier, a report by researchers Datassential and Sense360 showed. The burger chain also improved in the prior two weeks.
The positive results show that McDonald’s $1, $2 and $3 menu is resonating with diners. The company recently began advertising items on the revamped Dollar Menu, which includes chicken tenders, cheeseburgers and a new classic chicken sandwich. Recovering lost customers is key to McDonald’s turnaround, which Chief Executive Officer Steve Easterbrook has been leading with discounts, faster service, fresh beef and by franchising stores globally.
“It’s the power of a value offering,” said Dave Jenkins, managing director of customer solutions at Datassential in Chicago, referring to McDonald’s share gains over the past three weeks.
The company is scheduled to report fourth-quarter earnings on Tuesday and analysts are expecting another quarter of positive same-store sales. That metric rose 6 percent globally in the third quarter.
A popular Dollar Menu may not be good news for McDonald’s restaurant owners, however. Customers may be buying the cheaper fare instead of more expensive premium burgers like the Quarter Pounder. There is some owner concern about profit and cash flow because of the new menu, according to a recent survey of 26 of the chain’s domestic franchisees from Mark Kalinowski, an analyst at Nomura’s Instinet.
Sense360 tracks data from 2 million customers in cities across the U.S. and partners with Datassential to create a restaurant traffic report for more than 250 chains.
McDonald’s shares fell less than a percent to $177.43 in New York Monday. The stock had gained 3.6 percent this year through Friday.
©2018 Bloomberg L.P.