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CNN Business
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McDonald’s shares hit an all-time high on Friday as Wall Street cheered the company’s third-quarter results.
Shares hit about $274 on Friday, up about 3 percent on the day.
On Thursday, McDonald’s reported third-quarter consolidated revenue of about $5.87 billion, down from a year earlier before accounting for currency fluctuations, beating Wall Street’s expectations and starting to propel the stock to new levels. The company went public in 1965.
After the results, Cowen raised its price target to $293 from $280.In a note on Thursday, Cowen Restaurant analyst Andrew Charles wrote: “We are encouraged by [McDonald’s] A playbook that works has propelled America to outperform. ”
The burger chain has had recent success with promotions on its core products, such as Happy Adult Meals and Celebrity Meals. Sales at McDonald’s U.S. locations open for at least 13 months jumped 6.1 percent in the third quarter.
The burger chain was able to boost sales in part by raising prices. In the third quarter, McDonald’s prices in the U.S. averaged about 10% higher year-over-year.
If companies raise prices across the board, they must be careful not to scare off too many customers. Companies such as Coca-Cola (KO) and Pepsi (PEP) are offering food and beverages in smaller packages, offering customers cheaper options (even if they get worse deals on those items). Shares of PepsiCo (PEP) also hit an all-time high on Friday.
Another way to keep customers while raising prices is to focus on value.
“Consumers are willing to tolerate” higher prices because they still see McDonald’s as an affordable brand, CEO Chris Kempczinski noted on an analyst call Thursday discussing third-quarter results.
In fact, McDonald’s CFO Ian Bodden said on the conference call that McDonald’s has been increasing its share of “low-income consumers.”
McDonald’s is “positioned as a leading brand in terms of value for money and affordability,” Bodden said, noting that some customers are switching from buying meals to buying value items to save money. The company has been using its rewards program to help create more loyal customers. “Our loyalty program is driving growth and exceeding expectations,” Kempczinski noted.
McDonald’s does well in a bad economy.
Referring to the financial crisis of 2008 and 2009, Bodden said: “Our business performed well during the last downturn. Our expectation is that we will perform well in this environment, certainly relative to our competitors. In terms of.”
— CNN Business’ Paul R. La Monica contributed to this report.