Fast-food giant McDonald’s (MCD:NYSE) beat analysts’ expectations on 25 April after successfully shrugging off a challenging economic environment and rising costs.

The share price reaction to the quarterly results was modest, reflecting the fact the shares have already had a good run this year.

Its shares are trading 11% higher year-to-date against a 7% gain for the S&P 500 and are making record highs. McDonald’s reported earnings per share of $2.63 for the first quarter of 2023. Analysts were forecasting earnings per share of $2.33 versus $2.28 a year ago.

The fast-food giant’s revenue has been boosted by higher menu prices in the US and more customer traffic – proving consumer demand for convenient and reliable food options at the right price point is still there even if household budgets are tight.

Total revenue rose by 4.1% year-on-year to just under $5.9 billion. That compares to analyst forecasts of $5.59 billion.

Chris Kempczinski, McDonald’s president and CEO, said: ‘Our strong first quarter results demonstrate that our “Accelerating the Arches” strategy is working, as comparable sales grew 12.6% through a healthy balance of strategic menu price increases and positive traffic growth.’

The fast-food giant said marketing campaigns featuring menu items like the ‘CardiB & Offset Meal’ helped lift global company sales by 12.6%. Wall Street analysts expected same store sales would rise 7.5% in the US and 8.2% on a global basis.

As Kempczinski outlined, McDonald’s is benefiting from a new strategy originally announced in 2020 which encompasses its key growth pillars, including maximising marketing (brand and affordability), committing to core products (burgers, chicken and coffee), and focusing on the four D’s (delivery, digital, drive-thru and development).

McDonald’s managed to keep its costs largely  in check, with total operating costs and expenses only slightly higher year-on-year. It benefits from a franchise-based model, with most of its restaurants operated by franchisees. The company licences its operating model to franchise partners which has enabled it to expand without needing lots of extra capital.

In 2022, more than a third (circa 35%) of sales in the company’s top six markets came through digital channels, namely the mobile app, delivery and in-store kiosks where customers tap a screen to order.

At the end of last year, more than 85% of McDonald’s restaurants offered delivery capabilities. However, bringing food to customers’ homes doesn’t mean it is giving up on more traditional ways to serve people. It says that drive-thru will become even more important, with the vast majority of new restaurant openings in the US and international operated market segments set to include such facilities. It plans to open approximately 1,900 new restaurants in 2023 around the world.

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