Higher menu prices and customer visits boosted McDonald’s Corp (MCD.N) quarterly profit and sales above Wall Street estimates on Tuesday, but shares fell when the burger chain warned inflation will weigh on margins in 2023.

Shares of the burger chain fell about 2.6% to $263.84 in U.S. trading, after gaining about 6% in the last 12 months.

Investors are watching bellwethers like McDonald’s for any signs its customers are paring back spending. Consumer demand is key to determining whether the Federal Reserve’s monetary tightening will help cool the U.S. economy without causing a recession.

“Overall, the consumer, whether it’s in Europe or the U.S., is actually holding up better than… what I would have expected a year ago or 6 months ago,” Chief Executive Officer Chris Kempczinski said during a call with investors.

Even so, he said the Big Mac maker still expects a mild to moderate U.S. recession this year, with a deeper, longer recession in Europe.

Profit margins at company-operated restaurants were about 15% in the quarter because of higher labor, energy and commodity costs. The company said that full year 2023 company-operated margins will come in slightly lower than that.

McDonald’s is also the first major global restaurant brand to report quarterly earnings so far this year.

Investors are hoping that as costs for butter, dairy and other ingredients start to fall, some chains could forecast more profitable restaurant operations this year.

McDonald’s profits will also be pressured this year by its plans to invest up to $2.4 billion on capital expenditures, about half of which will go to build 1,900 new restaurants around the world.

Some of those will fund a big U.S. expansion, the chain’s first in 8 years.

But investors can “digest that and then start looking to 2024, and the potential to really leverage McDonald’s earnings growth,” said Gretchen Novak, senior portfolio manager at Charles Schwab, which holds about 0.71% of McDonald’s shares.

Like other fast-food chains, Chicago-based McDonald’s raised prices of its burgers and fries last year to keep up with surging commodity and labor costs.

The price hikes did not deter customers. Traffic rose 5% for full-year 2022, McDonald’s disclosed on Tuesday, as its meals remained less expensive than many competitors, drawing low-income consumers.

A Big Mac in New York City now costs about $5.39 – less than a $5.65 Venti Cappuccino at a nearby Starbucks.

Low-income consumers are spending less with each McDonald’s visit, but eating there more often, Kempczinski said.

By the third quarter, McDonald’s menu prices were 10% higher than the year before. It did not provide an update on higher menu prices on Tuesday.

The chain launched its Cactus Plant Flea Market Box – an adult version of its Happy Meal for kids – with menu items including its Big Mac and Chicken McNuggets, helping it post better-than-expected U.S. sales.

“McDonald’s is in the right place at the right time for being a market share gainer in this environment,” said Neuberger Berman analyst and portfolio manager Kevin McCarthy.

McDonald’s fourth-quarter global same-store sales also beat estimates with a 12.6% rise, compared with the average analyst estimate of an 8.6% increase, according to data from Refinitiv.

The company reported profit of $2.59 per share, an increase of 16%. Analysts on an average expected profit of $2.45.

McDonald’s U.S. comparable sales rose 10.3% in the quarter ended Dec. 31. Global revenue dropped 1% to $5.93 billion because of the impact of the stronger U.S. dollar against foreign currencies while in constant currencies, revenue rose 5%.

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