McDonald’s looks Down Under to gauge global rebound | Ralph Lauren

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McDonald’s is back on track in the US and other key markets but still seeing a sales drag from coronavirus restrictions in other parts of the world.

President and chief executive Chris Kempczinski said Australia, where sales have largely recovered, gives a good idea of post-pandemic demand.

Mobile ordering, delivery and takeaway remains elevated Down Under, he said, and customers ordering through those channels tend to spend more per order.

US same-store sales jumped 5.5 per cent in the October-December period, pumped up by new menu items like spicy Chicken McNuggets and a meal deal collaboration with Colombian singer J Balvin. For the full year, McDonald’s said US same-store sales — or sales at stores open at least a year — were up less than one per cent, their sixth-consecutive year of growth.

But worldwide, same-store sales were down 1.3 per cent for the quarter, reflecting store closures and limited operating hours in various markets across Europe, Latin America and Asia. For the full year, global same-store sales were down 7.7 per cent, a bigger decline than the 7 per cent drop Wall Street had forecast, according to analysts polled by FactSet.

 Mr Kempczinski said 2020 was the most difficult year in the company’s history.

“While a new year brings new hope, the issues and uncertainty that emerged last year persist,” he said Thursday.

McDonald’s is doing better than many competitors. Earlier this week, Starbucks said its global same-store sales fell 5 per cent in the October-December period.

Drive-thru windows — available at nearly all US stores and two-thirds of stores in its biggest European markets — kept customers coming despite lockdowns. McDonald’s also benefited from a push into delivery made before the pandemic began. The company said nearly 30,000 stores worldwide now offer delivery, and the US, Australia and Canada doubled their percentage of delivery orders last year.

But it was more costly to operate in the pandemic. Over the last year, the company has deferred rent and royalties for franchisees and obtained hundreds of millions of masks for employees.

McDonald’s said marketing spending was higher than usual in the fourth quarter because of the launch of a new ad campaign, and it has given local franchisees $US200 million ($260m) more than initially planned this year to help their marketing efforts. The company also said it faced higher-than-expected costs to close underperforming restaurants, including around 200 in the US

The fast food giant fell short of Wall Street’s earnings and sales expectations for the fourth quarter. Revenue fell 2 per cent to $US5.3 billion, below analysts’ forecast of $US5.4b, according to FactSet.

Net income fell 12 per cent to $US1.4b. Adjusted for one-time items, the Chicago fast food giant earned $US1.70 per share in the fourth quarter, short of Wall Street’s expectation of $US1.77.

Mr Kempczinski said US sales this month have been elevated, likely because of a new round of government stimulus checks. International sales are still down, and will be until dining rooms reopen, he said.

The company plans to roll out a new loyalty app, MyMcDonald’s, in six markets by the end of this year. It’s designed to make it easier to order and entice members with targeted dining offers.

AP



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