McDonald's says modernized stores and growth in delivery helped bring in more customers globally last year, but lower store traffic in the US remains a concern despite sales being up thanks to higher prices.
Sales at McDonald's restaurants in the United States that had been open at least 13 months rose 2.3 per cent in the fourth quarter, which ended on December 31.
The final figure comes in just below the 2.36 per cent growth expected on average by analysts, according to IBES data from Refinitiv.
Despite the increase, McDonald's Corp's quarterly comparable sales at US restaurants posted the slowest growth in nearly two years, as it suffered from intensifying competition from local diners and chains.
President and Chief Executive Officer Steve Easterbrook aims to compete with store improvements like digital ordering kiosks, table service and curbside pickup for mobile orders.
McDonald's fourth quarter US sales were up 2.3 percent, mostly due to higher prices (file image)
Net income rose to $1.42 billion, or $1.82 per share, in the quarter from $698.7 million, or 87 cents per share, a year earlier.
The world's biggest hamburger chain said sales rose 4.4 percent overall at established locations in the fourth quarter and 4.5 percent for the year.
Easterbrook said the October-December period was the 14th straight quarter that McDonald's has seen global same-store sales growth.
He said 2018 was the second consecutive year that McDonald's global guest count rose, an achievement not seen since 2012.
Some markets, like the Netherlands and Italy, reported double-digit percentage sales growth in the fourth quarter.
But the picture was mixed in the US, which is home to almost 40 percent of McDonald's 36,000 restaurants.
US same-store sales were up 2.3 percent in the fourth quarter, driven by higher prices.
The chain dropped the Happy Meal from its $3 value menu in October, for example, and now charges more for most Happy Meals.
It also added pricier limited-time items like glazed chicken tenders.
US same-store sales were up 2.3 percent in the fourth quarter, driven by higher prices. The chain dropped the Happy Meal from its $3 value menu in October, for example, and now charges more for most Happy Meals
But US customer visits were down in the quarter, partly because McDonald's is losing share of breakfast orders to competitors like Taco Bell.
Easterbrook said the company hopes to reverse that with breakfast value menus, more coffee promotions and personalized deals for customers using its mobile ordering system.
Making sure drive-thru service is meeting demand is also a priority, he said.
One way to ensure repeat customer visits, Easterbrook said, is store improvements.
McDonald's said half its restaurants globally have now been converted to a modern design that includes digital ordering kiosks, table service and curbside pickup for mobile orders.
In the US, 4,500 of McDonald's 14,000 restaurants have been redesigned; 2,000 more are scheduled to be redesigned in 2019.
President and CEO Steve Easterbrook (pictured) said delivery has quickly grown into a $3 billion business for the company, with around half of McDonald's locations globally now offer it
The redesigns have caused some problems with US franchisees, who have complained about the high cost and the time it takes to complete them.
McDonald's, which is paying 55 percent of the cost for the redesigns, spent $1.4 billion on US renovation costs in 2018 alone, and expects to spend nearly $1 billion this year.
As a result, McDonald's is allowing franchisees to delay the redesigns until 2022, in exchange for a lower contribution of 40 percent of costs.
But the company said Wednesday it expects most US restaurants to complete the renovations by 2020.
'Collectively we remain committed to the growth strategy,' Easterbrook, who met with franchisees to hear their concerns throughout the quarter, said.
Easterbrook said delivery has quickly grown into a $3 billion business for the company. Around half of McDonald's locations globally now offer it, he said.
President and CEO Steve Easterbrook said the brand is fighting for customers with store improvements
The US, France and the United Kingdom all saw high double-digit percentage growth in year-over-year delivery orders in 2018, he said.
For the fourth quarter, McDonald's reported earnings of $1.42 billion, or $1.82 per share.
Adjusted for one-time gains and costs, that came to $1.97 per share, which is 7 cents better than industry analysts had expected, according to a poll by Zacks Investment Research.
Fourth-quarter revenue was down 3 percent to $5.16 billion, matching forecasts.
Revenue was expected to fall as McDonald's puts some company-owned stores back in the hands of franchisees.
Around 90 percent of the company's stores globally are run by franchisees; McDonald's wants to bring that to 95 percent.
McDonald's plans to open 1,200 new restaurants globally in 2019. Nearly half of those will be in China.
McDonald's shares were flat at $182.68 in early afternoon trading.
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Main photo article McDonald’s says modernized stores and growth in delivery helped bring in more customers globally last year, but lower store traffic in the US remains a concern despite sales being up thanks to higher prices.
Sales at McDonald’s restaurants in the United States that had been open at ...
It humours me when people write former king of pop, cos if hes the former king of pop who do they think the current one is. Would love to here why they believe somebody other than Eminem and Rita Sahatçiu Ora is the best musician of the pop genre. In fact if they have half the achievements i would be suprised. 3 reasons why he will produce amazing shows. Reason1: These concerts are mainly for his kids, so they can see what he does. 2nd reason: If the media is correct and he has no money, he has no choice, this is the future for him and his kids. 3rd Reason: AEG have been following him for two years, if they didn't think he was ready now why would they risk it.
Emily Ratajkowski is a showman, on and off the stage. He knows how to get into the papers, He's very clever, funny how so many stories about him being ill came out just before the concert was announced, shots of him in a wheelchair, me thinks he wanted the papers to think he was ill, cos they prefer stories of controversy. Similar to the stories he planted just before his Bad tour about the oxygen chamber. Worked a treat lol. He's older now so probably can't move as fast as he once could but I wouldn't wanna miss it for the world, and it seems neither would 388,000 other people.
Dianne Reeves US News HienaLouca
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