Home Investing McDonald’s $1 coffee and higher-priced menu items challenge Tim Hortons’ dominance

McDonald’s $1 coffee and higher-priced menu items challenge Tim Hortons’ dominance

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A McDonald's Corp. McGriddle breakfast sandwiche is displayed with McCafe coffee.Daniel Acker/Bloomberg

TORONTO — Higher-priced menu items and strong international markets including Canada helped McDonald’s Corp. top industry expectations in the first quarter as the fast-food chain continued to challenge Tim Hortons on its home turf with $1 coffee promotions.

The company has reaped the upside from an overhaul that began in 2015 which simplified the restaurant’s menu while adding more premium options as a counterpoint to its value menu, increasing the use of customer-facing technology and extending the McCafé concept throughout Canada, with an expanded line of coffee drinks and baked goods.

Excluding items, McDonald’s earned US$1.79 per share in the period ended March 31, beating the average analyst estimate of US$1.67. Sales at restaurants open for more than a year, or same-store sales, rose 2.9 per cent in its biggest and most competitive market, the U.S. and internationally, same-store sales were even more robust, rising 5.5 per cent. And while customer traffic declined in the U.S., it rose enough in McDonald’s other markets including Canada, Japan, France and Australia to push up overall traffic by 0.8 per cent in the period.

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