McDonald's Gains Sales, but U.S. Guest Counts Fall --2nd Update
January 29 2020 - 10:39AM
Dow Jones News
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.
McDonalds (NYSE:MCD)
Historical Stock Chart
From Apr 2024 to May 2024
McDonalds (NYSE:MCD)
Historical Stock Chart
From May 2023 to May 2024