McDonald's profit beats as Easterbrook turnaround gathers steam

REUTERS - McDonald's Corp reported a better-than-expected rise in quarterly profit and U.S. same-restaurant sales, helped by cost cuts, the expansion of its all-day breakfast menu, and Big Mac and beverage promotions.

McDonald's shares - set to open at a life-high on Tuesday - were up 2.4 percent in premarket trading after the company beat first-quarter earnings estimates by 14 cents and said operating costs were 11.7 percent lower.

Chief Executive Steve Easterbrook, who introduced the all-day breakfast soon after he took the helm in 2015, has vowed to transform the world's largest fast-food chain into a "modern, progressive burger company".

Under his management, McDonald's has also banned the use of certain antibiotics in U.S. chicken and plans to update U.S. restaurants with self-service kiosks, mobile payments and "smart" menu boards.

Sales at U.S. restaurants open for more than 13 months rose 1.7 percent in the three months ended March 31, topping estimates of a 1.3 percent increase, according to research firm Consensus Metrix.

Net income jumped 8 percent to $1.21 billion, or $1.47 per share, handily beating analysts' average estimate of $1.33, according to Thomson Reuters I/B/E/S.

Revenue fell 3.9 percent to $5.68 billion - the eleventh straight quarter of declines - mainly due to the sale of restaurants to franchisees as part of Easterbrook's turnaround plan. Analysts had estimated revenue of $5.53 billion.

At least five brokerages have raised their price targets on McDonald's stock since it said in March that it had begun testing its long-awaited mobile ordering app, hoping to win back customers after four straight years of traffic decline.

McDonald's has said automating more orders should cut transaction times, reduce errors and free up workers to deliver food to tables or cars in spots designated for mobile orders.

(Reporting by Richa Naidu in Bengaluru; Editing by Shounak Dasgupta)