Despite high costs and its withdrawal from Russia, McDonald’s has managed to achieve better than expected growth in the last quarter. Sales rose by 12 %, driven by hungry Europeans.
Overseas sales up by a fifth
McDonald’s managed to post strong growth in the quarter, with sales up 11.8 % to 5.7 billion dollars (5.4 billion euros), beating analysts’ expectations. Sales outside the United States even rose by more than a fifth, while domestic growth was more modest at 3.5 % – which was still above expectations.
In China, however, sales fell due to the tightening of anti-Covid measures, so much of the growth came from the European market. The burger chain increased its prices, but also invested in successful marketing campaigns and sold more online.
500 million for the tax authorities
Still, Ronald McDonald’s chain was hit hard by the loss of Russia and Ukraine. The company has withdrawn from these countries, but McDonald’s still had to set aside 27 million dollars (25 million euros) to pay rents, salaries and suppliers. Another 100 million dollars was written off on food and products that are likely to end up in the bin.
A dispute with the IRS could cost McDonald’s another 500 million dollars. The fast-food chain has set aside this amount for a “tax dispute”, without saying more. Rising raw material prices, particularly for chicken and beef, are cutting into profit margins as well. In total, profit for the first three months of the year has fallen from 1.5 billion dollars a year ago to 1.1 billion dollars now.