MCD McDonalds Corp

By Heather Haddon and Micah Maidenberg 

McDonald's Corp. lost more customers in its home market last year.

Chief Executive Chris Kempczinski said Wednesday that global same-store sales last year were the highest in more than a decade. But guest counts to restaurants in the U.S., McDonald's biggest market, fell 1.9% in 2019 from a year earlier.

The company has struggled to draw in customers domestically as rivals have expanded and consumers have gravitated toward eating at home. McDonald's is investing in technology to try to boost sales through delivery and digital-ordering kiosks, along with trying to sharpen its promotions.

"Growth in this industry at this point is going to have to come through stealing share," Mr. Kempczinski said in his first earnings call since taking the top job at McDonald's last year.

Shares were up 1.8% in early trading.

He said McDonald's is particularly focused on boosting its share of breakfast sales by improving operations and its morning menu. McDonald's said this week that it was adding two chicken sandwiches at breakfast for a limited time. Traffic at breakfast improved in the latest quarter, Mr. Kempczinski said.

"We have to win at breakfast," he said.

McDonald's said it had closed several hundred locations in China's Hubei province due to the coronavirus outbreak. Around 3,000 McDonald's stores in China remain open, the company said. China was McDonald's second-largest single market, though executives said it accounted for around 4% of global sales.

"Obviously the situation in China is fluid and concerning," Mr. Kempczinski said.

The company sold an 80% stake in its China business to an investor group in 2017, making it less exposed to the effects of the outbreak than American brands that directly own locations there.

Starbucks Corp. on Tuesday said it had closed half of its stores in China due to the outbreak, a move it said would hurt its financial results in the current quarter.

McDonald's said it expects to step up openings of new restaurants this year around the world, forecasting 1,000 net store additions compared with 840 in 2019.

The Chicago-based company said store upgrades, promotions and menu-price increases boosted same-store sales in the U.S. last year. Demand for core items, such as fresh-beef Quarter Pounders and french fries and orders for delivery contributed to the sales growth.

McDonald's struck delivery deals with DoorDash Inc. and Grubhub Inc. in the U.S. last year, and added delivery through Just Eat PLC in the U.K. earlier this week.

McDonald's appointed Mr. Kempczinski chief executive in November after the board fired his predecessor Steve Easterbrook for violating company policy by having a consensual relationship with an employee. Mr. Kempczinski has said he is looking to reinforce high ethical standards at the company.

Mr. Kempczinski previously served as president of McDonald's U.S. business, where he worked on projects to draw in customers, and on investments with franchisees to remodel stores and introduce new technology.

Technology investments are expected to cost the company this year. McDonald's plans to spend about $2.4 billion on capital projects this year, with more than half of that amount, or $1.3 billion, slated for investments in the U.S.

McDonald's reported $5.35 billion in fourth-quarter revenue, up from $5.16 billion the year earlier and more than the $5.31 billion that analysts polled by FactSet expected. Same-store sales, those at restaurants open at least 13 months, rose 5.9% globally. International-operated same-store sales increased 6.2%, while those at U.S. locations were up 5.1%.

Profit for the latest quarter increased to $1.57 billion from $1.42 billion a year earlier. Excluding a gain tied to the federal tax cut passed in 2017, earnings were $1.97 a share, a penny more than what analysts expected.

Write to Heather Haddon at heather.haddon@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

January 29, 2020 10:24 ET (15:24 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.