Not all is well under the Golden Arches. McDonald’s (NYSE:MCD) on Thursday reported quarterly earnings and revenue that missed analysts’ expectations as higher costs weighed on its profits.
It marks the fourth earnings miss for the company in eight quarters.
The burger juggernaut reported fourth-quarter net income of $1.64 billion, or $2.18 per share, up from $1.38 billion, or $1.84 per share, a year earlier. Excluding charges related to the sale of McD Tech Labs to IBM (NYSE:IBM) and other items, McDonald’s earned $2.23 per share, falling short of the $2.34 per share expected by analysts.
Operating costs and expenses rose by 14% in the quarter. Those higher costs include wage hikes by McDonald’s and many of its franchisees to attract and retain workers in a tough labor market. The ingredients for menu staples like its Big Macs and McNuggets are also becoming more expensive.
Net sales rose 13% to $6.01 billion, missing expectations of $6.03 billion. The company’s same-store sales climbed 12.3% from a year ago and 10.8% on a two-year basis. Menu price hikes implemented to combat rising costs helped boost sales.
In McDonald’s home market, same-store sales rose 7.5%, topping StreetAccount estimates of 6.9%.
On a two-year basis, U.S. same-store sales climbed 13.4%. In addition to higher menu prices, the company credited its growing loyalty program and promotional menu items like the McRib for the market’s strong performance.
Whether holders of MCD stock "deserve a break today" remains to be seen; shares opened Thursday down $2.62, or 1.1%, to $247.23.
