McDonald's Is Booming For The Same Reason It Always Has

McDonald's recently released its third quarter earnings for 2023, and even after raising menu prices, the company is still going strong. It reported an 11% increase in global systemwide sales and an 8.1% increase in sales versus the same period in 2022. But what is the secret behind this unwavering prosperity? No, it's not the release of Big Mac Sauce cups, or even the new Mambo sauce, both new additions to the menu in Q3. Instead, the key to the brand's success in 2023 is the same one that has powered McDoanld's for decades: a value menu and tons of marketing.

In times of economic stress, McDonald's has always positioned itself as the best way to feed families on a budget. At this time last year McDonald's was reporting its menu prices had increased 10% year over year, yet despite rising menu prices, customers were still flocking in. For the third quarter of 2022, the fast food chain's U.S. sales were up 6.1%. Because even when McDonald's raises the cost of a meal, it still makes sure to be the cheapest option in town.

Now, a year later, the economy is still shaky, inflation is still impacting consumer spending, and people are prioritizing value when they go out to eat. Once again, menu prices are up about 10% for 2023, but during the recent earnings call, McDonald's executive leadership noted the success of various value promotions, including a McMuffin-and-coffee deal that ran in Canada, Germany's McSmart menu composed of smaller and more affordable meals, and the $1, $2, and $3 Dollar Menu options in the U.S..

Although the company acknowledges part of its impressive sales numbers for the quarter are due to menu price increases, it is also notable that customers haven't been scared off by higher prices. There was a small dip in foot traffic at McDonald's restaurants in September—down 3.7% since last year, according to Placer.ai data—but that's less than the 4.2% decrease the dining industry saw overall.

"We're focused on maintaining our value leadership... but we have lots of things that go into value, beyond price," said CEO Chris Kempczinski on the most recent earnings call.

Per McDonald's recent earnings report, "effective marketing campaigns and continued digital and delivery growth contributed to strong comparable sales results."

In 2022, the release of the Cactus Plant Flea Market x McDonald's Box, a.k.a the Adult Happy Meal followed by the highly anticipated return of McDonald's Boo Buckets was a one-two punch of high-profile promotion. While 2021 was the year of the celebrity meal, 2022 leaned harder on childhood nostalgia. And amidst these limited-time offers, McDonald's has also enticed millions of customers to download its app.

Last quarter, McDonald's celebrated itself by releasing the "As Featured In" meal, essentially touting the brand's iconic status via its various pop culture appearances. And just this month, the chain also brought back its Halloween pails once again and added a fourth design, much to the excitement of collectors.

"It's clear that our customers continue to seek reasonably priced meals as rising costs persist, and our markets around the world continue to respond," McDonald's CFO Ian Borden said on the earnings call. In other words, it's business as usual for a brand that has always been known for being filling and cheap.