Investors are heading into McDonald's (NYSE:MCD) third-quarter report with more information than usual thanks to the fast-food giant's recent sales update. That announcement in early October revealed that Mickey D's had returned to sales growth in the core U.S. market even as its global revenue trends stayed negative through late September.

Its upcoming results, set for Monday, Nov. 9, will add context to those headline numbers while answering a few big questions for shareholders around profit margin and the competitive outlook for the industry.

A man holding a bag of to-go food and a soda.

Image source: Getty Images.

Sales details

We already know that revenue growth turned positive over the last few months, with comparable-store sales rising 4.6% in the U.S. market compared to a 9% decline in the second quarter. That result put McDonald's ahead of some peers like Starbucks, which recently posted a 9% comps decline through late September.

We'll get important context about McDonald's growth on Monday, including the exact breakdown between customer traffic and average order size. The chain, like Starbucks, is seeing major shifts on these metrics as shoppers reduce their visit frequency and opt for home deliveries during the pandemic.

McDonald's has a robust drive-thru platform and a deep sales footprint outside of metropolitan areas, two assets that are helping it outperform rivals through COVID-19 disruptions. Look for CEO Chris Kempczinski to highlight those wins on Monday.

Rising expenses

Investors are bracing for some bad news on the profit front, with earnings falling to $1.89 per share from $2.11 per share a year ago. The chain faces many of the same challenges here that impacted its Q2 results, including rising costs tied to temporary store closures and COVID-19 safety measures.

But the two factors that will say more about McDonald's earnings power going forward are delivery expenses and marketing costs. Starbucks reported a spike in each metric in late October as the chain fought to reestablish its dominant position through the shift in consumer shopping patterns. McDonald's should reveal a similar expense spike, especially around advertising and promotions, that supported its return to sales growth.

Looking ahead

In early October, McDonald's said investors could expect a few big-picture updates from the management team as part of its Q3 results. That strategic outlook should include more reliance on the digital sales channel and on the drive-thru and delivery platforms that help it stand out in a competitive industry.

The next fiscal year might be influenced by recessions in several of its biggest markets, including in the U.S. fast-food niche. That pressure would show up in weak earnings in 2021 and a likely slower pace of new store launches. Starbucks, for example, predicted it will open just 50 net new stores in its U.S. geography in fiscal 2021.

Investors won't get similarly detailed outlook numbers from McDonald's until it closes its fiscal year in early 2021. But this week's report should include comments about where management sees the business heading now that it's recaptured sales growth in the U.S. and is looking toward returning to growth on a global basis by the end of 2020.

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