McDonald\u2019s stock hit an all time high Friday as\u00a0Wall Street\u00a0cheered the company\u2019s\u00a0third quarter results.<\/p>\n\n\n\n
The share price hit about $274 on Friday, a jump of roughly 3% for the day.<\/p>\n\n\n\n
On Thursday, McDonald\u2019s reported consolidated revenues of about $5.87 billion for the third quarter, a year-over-year decline not adjusting for currency fluctuations, which beat Wall Street\u2019s expectations and started the stock moving to new levels. The company went public in 1965.<\/p>\n\n\n\n
Cowen raised its price target from $280 to $293 following the results. In a note Thursday, Cowen restaurant analyst Andrew Charles wrote that \u201cwe are encouraged by [McDonald\u2019s] proven playbook to drive US outperformance.\u201d<\/p>\n\n\n\n
The burger chain has had success with recent promotions focusing on its core products, like\u00a0adult Happy Meals\u00a0and\u00a0celebrity meals. In the third quarter, sales at McDonald\u2019s US stores open at least 13 months popped 6.1%.<\/p>\n\n\n\n
The burger chain has been able to drive sales in part by\u00a0raising its prices. In the third quarter, McDonald\u2019s US prices were up about 10% year-over-year on average.<\/p>\n\n\n\n
As companies across the board raise prices for their products, they have to take care not to scare too many customers away. Companies like Coca-Cola\u00a0(KO)\u00a0and PepsiCo\u00a0(PEP)\u00a0are offering food and drinks in\u00a0smaller packages, to give customers\u00a0less expensive options\u00a0(even if they get a worse deal on those items). PepsiCo\u00a0(PEP)\u2019s share price also hit an all-time high Friday.<\/p>\n\n\n\n
Another way to hold onto customers while raising prices is to\u00a0focus on value.<\/p>\n\n\n\n
\u201cConsumers are willing to tolerate\u201d price increases because they still see McDonald\u2019s as an affordable brand, noted CEO Chris Kempczinski during an analyst call discussing third-quarter results Thursday.<\/p>\n\n\n\n
In fact, McDonald\u2019s has been increasing its share \u201camong low-income consumers,\u201d said CFO Ian Borden during the call.<\/p>\n\n\n\n
McDonald\u2019s is \u201cpositioned as the leading brand in terms of value for money and affordability,\u201d said Borden, noting that some customers are shifting from buying meals to purchasing value items as a way to save. The company has been using its\u00a0rewards program\u00a0to help create more loyal customers. \u201cOur loyalty program is driving growth and exceeding expectations,\u201d Kempczinski noted.<\/p>\n\n\n\n
And McDonald\u2019s has a track record of doing well when the economy is flailing.<\/p>\n\n\n\n
\u201cOur business performed well in that last downturn,\u201d Borden said, referring to the financial crisis of 2008 and 2009. \u201cOur expectation is that we are going to perform well in this environment, certainly on a relative basis to our competitors.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"