Donut Sticks and bacon send McDonald's sales through the roof

New menu items, promotions helped

By Jordan Valinsky, CNN Business
McDonald's via CNN

Donut Sticks are McDonald's latest breakfast creation. The fried dough rods come in order of six or a dozen, and are served warm with cinnamon and sugar.

(CNN) - Donuts Sticks and bacon were a sweet and savory success for McDonald's last quarter.

McDonald's reported strong first-quarter earnings because of robust sales for new menu items and promotions. McDonald's said global comparable sales jumped 5.4% -- its 15th consecutive quarter of global sales growth for the company. US sales grew 4.5%.

During the quarter, McDonald's added Donut Sticks to its breakfast offering and a new 2 for $5 Mix and Match deal. It also said its "Bacon Event," a one-day event in January that let customers add bacon on the side of any order, was a big success.

The boost in sales fueled by Donut Sticks and bacon shows how important breakfast continues to be for the fast food sector. It's the industry's only growth market.

Breakfast sales at fast-food restaurants rose 1% last year, but overall sales were flat, according to NPD. More people prepare breakfast at home than any other meal, so quick-serve restaurants believe there is room for growth.

That's why fast-food restaurants are redoing their menus to capture market share from their competitors. For example, Dunkin' added two new breakfast bowls and Burger King is testing out a coffee pass for $5 per month. Panera also recently overhauled its breakfast offerings with better coffee and new sandwiches.

Despite growth in comparable sales, McDonald's consolidated revenue for the quarter slipped nearly 4% to just under $5 billion because of refranchising costs.

Another struggle for McDonald's this quarter was its late-night menu. It slashed several items it sells from midnight to 5 am, including chicken sandwiches and salads. The chain explained it wanted to reduce the "complexity" of menus and store operations.

McDonald's raised menu prices 2% recently to combat rising costs.

It also abandoned its Signature Crafted Recipes line of burgers, which includes items like a mushroom and swiss cheese burger and one with bacon, cheddar and fried onions. It will instead focus on staples like the Quarter Pounder.

McDonald's priority remains redesigning its restaurants with new technology to help make ordering faster and easier for customers, CEO Steve Easterbrook said in a statement. The company said its self-serve ordering kiosks and digital menu boards are having a positive impact on sales.

The company also said it will continue to expand its delivery and digital ordering options.

Last month, McDonald's purchased a tech startup that uses artificial intelligence to give consumers personalized experiences. McDonald's said it would use the startup's technology to tailor the items displayed on menu boards at drive-thru outlets based on the weather, how busy the restaurant is and the time of day.

It plans to integrate the platform into its drive-thru menu boards at outlets in the United States this year before expanding it to major international markets.

McDonald's stock was unchanged Tuesday.

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