McDonald's turns up heat on sales and cooks up strong profits

Higher prices on menu led to surprisingly strong comparable-store sales during the first quarter, sending shares up sharply Monday.

The company worked to grow its US business with new initiatives, like swapping out frozen beef patties for fresh ones in its Quarter Pounder burger. It also launched a new value menu earlier this year, reviving its once-popular Dollar Menu, but with items priced at $1, $2 or $3. The idea is to get people in for cheaper items who then upgrade to pricier ones.

Sales rose 2.9 percent at established restaurants in the U.S., the company's biggest market. Worldwide, that figure rose 5.5 percent, which is a lot stronger than the 3.6 percent increase that industry analysts had forecast, according to a survey by FactSet.

The results underscore the success of Chief Executive Steve Easterbrook's multi-year turnaround plan launched in 2015 to refresh McDonald's menus, add more technology to stores and make outlets more welcoming for customers.

The Oak Brook, Illinois, company also reported healthy profits and revenue.

McDonald's earned $1.38 billion, or $1.72 per share, for the period ended March 31. A year earlier, the hamburger chain earned $1.21 billion, or $1.47 per share.

Adjusted earnings came to $1.79 per share, which is way better than the per-share earnings of $1.67 that industry analysts had projected, according to Zacks Investment Research.

Total revenue declined 9 percent $5.14 billion, but still beat expectations. McDonald's said the drop was due to its on-going move to convert more company-owned restaurants into franchised ones, lowering its revenue.

Shares of McDonald's Corp. surged more than 5 percent to $166.55 in early trading.