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McDonald's Misses on Earnings Despite Robust McRib and Crispy Chicken Sales

McDonald's posts weaker-than-expected fourth-quarter earnings as demand for McRib and Crispy Chicken sandwiches fails to propel sales above Wall Street forecasts.

Strong sales of Crispy Chicken and McRib sandwiches and ongoing digital sales that continue to embolden customers to spend more failed to boost McDonald's  (MCD) - Get McDonald's Corporation Report fourth-quarter earnings and sales numbers above Wall Street forecasts.

McDonald's on Thursday reported fourth-quarter net income of $1.64 billion, or $2.18 a share, up from $1.38 billion, or $1.84 a share, a year earlier. Operating costs and expenses rose by 14% in the quarter.

Excluding charges related to the sale of McD Tech Labs to IBM and other items, McDonald’s earned $2.23 a share, the company said, below the $2.34 a share expected by analysts polled by FactSet.

Net sales rose 13% to $6.01 billion, driven by "strategic menu price increases" as well as strong menu and marketing promotions surrounding the company's McRib and Crispy Chicken Sandwich offerings, McDonald's said.

Growth in digital channels, driven by the company's loyalty program, also contributed to comparable sales growth, with comparable sales increasing 13.4% on a two-year basis, the company said.

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McDonald’s said that while Covid-19 disruptions have generally eased, the chain still dealt with some government restrictions on restaurant operating hours, limited dine-in seating and some dining-room closures during the most recent quarter.

Even before the pandemic, McDonald's had already been focused on modernizing and speeding up how customers get their Quarter Pounder combos quickly, including rolling ordering kiosks in its stores and pushing its app, where customers can order online and have it either waiting for them when they arrive or brought to their car. 

Kempczinski highlighted just how much those efforts and changes paid off in comments during the company's third-quarter earnings call. Delivery also has been a driver behind the sales boost -- in addition to customers' willingness to spend more money thanks to the shame of telling another human that you want you want that milkshake too being digitally removed.

McDonalds shares were down 1.94% at $245 in premarket trading following the earnings announcement.

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