Updated to include CEO's comments from Thursday's earnings call.
A Big Mac of a turnaround may be cooking for beleaguered McDonald's (MCD) .
On Thursday, the fast-food giant reported third-quarter earnings of $1.40 a share, trouncing forecasts for $1.27 a share. Same-restaurant sales were positive in all of McDonald's regions. But the real surprise was in the U.S., where quarterly same-restaurant sales rose for the first time in two years.
On a call with analysts, McDonald's president and CEO Steve Easterbrook said the U.S. made "tangible signs" of progress and the company is simply "running better restaurants than a year ago."
U.S. sales gained 0.9%, beating forecasts for a 0.2% decline. According to the company, the introduction of its new buttermilk crispy chicken sandwich, which was heavily marketed on TV, boosted performance. McDonald's also saw solid demand for Egg McMuffins due to what it says was a "return to classic recipe ingredients," including using butter on the sandwich instead of margarine.
"The third quarter marked an important step in the company's global turnaround," boasted Easterbrook in a statement. The surprising performance of the U.S. in the third quarter raises the prospect of McDonald's turning in a decent sales result for the fourth quarter in the wake of its all-day breakfast launch on October 6.
On the earnings call, Easterbrook sought to downplay reports that franchisees were upset with the roll-out of all-day breakfast since it was slowing up order times. "The roll-out has been successful," said Easterbrook.
Results may receive a further boost if McDonald's is able to ignite its restaurant traffic via a rumored launch of a new national value program. Easterbrook failed to provide a definitive timeline on when a new value program would arrive, however, saying only the Golden Arches was "looking at one for 2016."
The U.S. isn't the only region that surprised investors, however. McDonald's noted "very strong comparable-sales performance in China" during the quarter, which stands in stark contrast to the weak results in the country for Yum! Brands' KFC and Pizza Hut chains. In fact, Yum! Brands results have been so soft in China that it's now seeking to spin off its Chinese assets.
Easterbrook, who is credited with turning around McDonald's U.K. business, said fourth-quarter same-store sales are expected to be positive in all regions. The comments sparked optimism that McDonald's all-day breakfast rollout that began earlier in October has been well-received, and not the disaster some franchisees have complained about.
Shares of McDonald's were up 7.5% in trading on Thursday.