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McDonald's launches new growth strategy; beats profit estimates

(Reuters) - McDonald’s Corp said on Monday it would test a loyalty program for customers and launch a new crispy chicken sandwich next year as it refocuses its long-term strategy to look beyond the COVID-19 pandemic.

FILE PHOTO: The McDonald's company logo stands on a sign outside a restaurant in Bretigny-sur-Orge, near Paris, France, July 30, 2020. REUTERS/Benoit Tessier/File Photo

The world’s biggest burger chain beat revenue and profit estimates for the third quarter on Monday as customers in the United States ordered more hamburgers and fries in drive-through outlets and on delivery apps to avoid dining out during the pandemic.

Overall, global sales fell 2.2% in the quarter, an improvement over the previous quarter’s drop, as McDonald’s had already announced in an October update.

The company’s limited-time promotional deal with rapper Travis Scott, which caused shortages of some ingredients, and other marketing investments also helped sales bounce back from pandemic lows.

Shares were last 2.3% higher amid broader market gains.

McDonald’s plans next year to prioritize marketing, including new packaging globally with a “modern, refreshing feel and playful touches to unify branding” it said in a statement.

McDonald’s will focus on core products such as burgers, coffee and chicken, including a new Crispy Chicken Sandwich - something some franchisees have long sought in order to compete with the success of similar products at Popeyes, a unit of Restaurant Brands International Inc, and Chick-fil-A.

It will also soon include another growth driver that other chains have long had: loyalty programs.

“MyMcDonald’s” digital program will allow customers who sign up to get tailored offers, the company said. A loyalty rewards program using the MyMcDonald’s program will start as a pilot in coming weeks in Phoenix and next year across the United States.

It will also launch a “McPlant” line of plant-based menu items it will make itself, though it previously tested a vegan “P.L.T.” burger by Beyond Meat Inc in Canada.

Finally, it will build some locations without any dining rooms to focus on carryout, drive-through and delivery only.

Despite some sales recovery and better-than-forecast margins, the company is still pressured in key markets outside the United States, including France, Germany and Britain by new lockdown restrictions due to a spike in coronavirus cases.

McDonald’s total revenue fell about 2% to $5.42 billion in the three months ended Sept. 30, largely recovering from the over 30% plunge posted in the second quarter.

Analysts on average had estimated revenue of $5.40 billion, according to IBES data from Refinitiv.

U.S. customer traffic still remained down from a year earlier, the company said.

Net income surged 10% to $1.76 billion, helped by gains from the sale of a part of McDonald’s stake in its Japanese affiliate.

Excluding those gains, the company earned $2.22 per share, beating estimates of $1.90.

Reporting by Uday Sampath in Bengaluru and Hilary Russ in New York; Editing by Sriraj Kalluvila and Bernadette Baum

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