MCD McDonalds Corp

By Micah Maidenberg 

McDonald's Corp. said sales for its existing base of restaurants globally fell 22% last month as the coronavirus spread and the U.S. economy and others around the world shut down.

The hamburger chain on Wednesday said same-store sales, or those at restaurants open at least 13 months, increased in January and February but then dropped sharply. In the U.S., McDonald's largest single market, March same-store sales fell 13% from a year earlier as elected officials issued guidelines requiring restaurant dining rooms to close and consumers stayed home.

Overall for the first quarter, McDonald's comparable sales gained 0.1% in the U.S. while dropping 3.4% globally. The company said the primary reason for the decline was China, where about a quarter of its restaurants were fully shut down at the peak of closures in early February.

The company said currently 99% of its restaurants in the U.S. are offering at least some service, such as delivery, carryout or meals via drive-through windows.

Locations in some countries, including France and Italy, have been forced to close. In contrast, in Brazil about 60% of restaurants are operating. Globally, 75% of stores have at least limited service, the company said.

"There will be more challenges and difficult business decisions to be made," McDonald's Chief Executive Chris Kempczinski said in a statement.

So far, the Chicago-based company's supply chain for food, packaging and other items hasn't experienced disruptions, Mr. Kempczinski said.

Restaurant companies have been scrambling to respond to the Covid-19 pandemic amid social-distancing rules and practices that have kept diners at home. Restaurant revenue has slumped, though fast-food chains including McDonald's are better able to ride out the crisis because they offer drive-through service.

McDonald's on Wednesday withdrew its financial forecast for 2020, citing uncertainty caused by the pandemic. It also said it expects to reduce capital spending by about $1 billion this year in part because the company will dial back on opening new restaurants in most markets.

The company said it has deferred some rent and royalties payments by franchisees in almost all of the areas it operates.

Mr. Kempczinski, who became CEO of McDonald's last year, offered to reduce his base salary by 50%, while other top executives offered 25% reductions, for the period running from April 15 to Sept. 30, the company said. The board approved those cuts.

McDonald's also said it expects to include in its first-quarter results $40 million in costs tied to the cancellation of a franchisee convention and about $35 million in expenses connected to investments in restaurant technology and research and development projects.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

April 08, 2020 12:30 ET (16:30 GMT)

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