McDonald’s On Monday, quarterly disappointing quarterly revenue was reduced by more than expected sales at U.S. restaurants following the outbreak of E. coli just weeks after the quarter.
However, the company’s shares rose more than 4% in morning trading as executives predict sales will improve in 2025.
Based on an analyst survey by LSEG, the company reported the following compared to what Wall Street had expected:
Earnings per share: Adjusted $2.83, expected range: $63.9 billion vs. $6.444 billion
Net sales were almost flat compared to the same period last year. StreetAccount estimates show that the company’s overall same store sales increase by 0.4%, up 1% above its forecast for the same store sales on Wall Street.
However, McDonald’s US business reported a sharp drop in sales in the same store than expected. Sales at the same store at the company’s domestic restaurants fell 1.4% in the quarter. Wall Street had forecast a 0.6% decline in sales for the same store.
McDonald said the traffic was slightly positive, but customers spent less than usual during the quarter. Over the summer, the chain rolled out $5 combo meals, regaining a dull sales that was price-sensitive diners and opposite. This strategy worked and helped McDonald’s US store sales check up in the third quarter.
However, analysts warn that a valuable meal will only work if a customer also adds menu items that are not discounted to an order. An McDonald’s executive downplayed these concerns on Monday, saying the average check for a $5 meal contract is over $10.
McDonald’s biggest US sales hit occurred in late October, when the Centers for Disease Control and Prevention linked the fatal E. coli outbreak to Quarter Pounder Burger. McDonald’s suppliers switched suppliers for onion slivers. The ingredients are surrounded by fingers as potential culprits. In early December, the CDC officially declared its outbreak.
However, in the days following the news of the outbreak, traffic at McDonald’s US restaurants fell sharply, especially in affected states.
US sales hit their NADIR in early November, but then began to rise again. In particular, demand for quarter pounders, a popular core menu item with high margins, has dropped rapidly in the wake of the crisis.
McDonald’s expects US sales to recover by the beginning of the second quarter, executives said.
“What we’re seeing now is that the effects of E. coli are now localized in areas where the biggest impact has now been,” CEO Chris Kempczynski said during a company conference call. I did. “So think of it as truly a rocky mountainous area that was the epicenter of this issue.”
The company hopes that value trading will help drive the recovery this year, along with the addition of a major menu. In 2025, the burger chain is set to regain its popular snack wrap that will disappear from its menu during the pandemic lockdown and introduce new chicken strip menu items.
Outside of the US, sales were stronger. Both McDonald’s international divisions report that sales in the same store increased, boosting the company’s overall performance.
The company’s international development licensing market segment, including the Middle East and Japan, reported sales growth for the same store of 4.1%.
McDonald’s International Operating Markets, including some of the largest markets, reported the same store sales growth of 0.1%. The company said most markets report increased sales for the same store, but in the UK and other markets, sales for the same store were shrinking in the quarter. One bright spot is France, with sales from the same store being positive after a few months of weak demand.
McDonald’s reported net income in fourth quarter ($2.80 per share) from $2.04 billion a year ago, or $2.80 per share.
McDonald’s won $2.83 per share, excluding profits related to the sale of its Korean business, the transaction costs for purchasing Israeli franchises and other items.
Looking to 2025, the first quarter is expected to be a low point for McDonald’s store sales at the same store, CFO Ian Borden cites a weak start to the year in the US, among other factors. Masu. Winter storms and wildfires in California were driving traffic to restaurants across the industry in January.
Over the course of a year, McDonald’s plans to open around 2,200 restaurants. Approximately a quarter of these locations are in the US and its international operating markets. The rest is in the company’s international developmental licensing market, including around 1,000 new restaurants in China.
McDonald’s plans to spend between $3 billion and $3.2 billion on capital expenditure this year, including investments in restaurant openings.
The company also forecasts headwinds of 20 cents per share to 30 cents per share, due to foreign currency exchange rates.
