On Wednesday, McDonald’s Corporation reported solid global comparable sales (comps) and loyalty momentum in the third quarter. However, it experienced slower underlying growth, and a decline in company-operated restaurant sales weighed on the results.

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The shares of the fast-food giant gained premarket on Wednesday after the firm reported third-quarter adjusted earnings per share of $3.22, missing the analyst consensus estimate of $3.33.

Quarterly sales of $7.07 billion missed the Street view of $7.095 billion. Consolidated revenues increased 3% (1% in constant currencies), while revenues from franchised restaurants rose 7% to $4.363 billion.

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Sales by Company-owned and operated restaurants fell 3% to $2.563 billion.

The Non-GAAP operating margin for the third quarter was 47.2%, and the GAAP operating margin was 46.5%.

Same-store Sales

Global comparable sales rose 3.6%, driven by a 2.4% gain in the U.S. and a 4.3% increase across International Operated Markets.

International Developmental Licensed Markets performed the strongest, advancing 4.7% in the quarter, led by Japan.

Global Systemwide sales totaled over $36 billion for the quarter, up 8% year over year, or 6% in constant currency.

Operating income in the quarter under review increased to $3.357 billion from $3.188 billion.

Loyalty-member Systemwide sales across 60 markets were about $34 billion for the last twelve months and over $9 billion for the quarter.

“We’re fueling momentum by delivering everyday value and affordability, menu innovation, and compelling marketing that continue to bring customers through our doors,”  said Chairman and CEO Chris Kempczinski.

Currency Impact

McDonald’s noted that its Systemwide sales and revenue continued to be negatively impacted by the war in the Middle East. This impact was felt primarily in the International Developmental Licensed Markets.

Conversely, the company’s consolidated results benefited from favorable foreign currency translation, which primarily reflected the strengthening of most major currencies against the U.S. Dollar. This currency benefit added $151 million to total revenues and had a positive impact of $0.04 on diluted earnings per share.

Outlook

McDonald’s reaffirmed its 2025 outlook, expecting net restaurant unit expansion to contribute slightly more than 2% to its 2025 Systemwide sales growth, in constant currencies.

It sees the 2025 operating margin to be in the mid-to-high 40% range.

Capital expenditures for 2025 are projected to be between $3.0 and $3.2 billion.

The majority of this spending will be directed toward expanding new restaurant units in the U.S. and internationally operated Markets.

Globally, the company expects to open approximately 2,200 restaurants in 2025, including about 600 new restaurants in the U.S. and International Operated Markets.

The company expects to achieve a free cash flow conversion rate in the low-to-mid 80% range.

MCD Price Action: McDonald’s shares were up 2.60% at $307.00 at the time of publication on Wednesday, according to Benzinga Pro data.

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