McDonald’s Results Show Uneven Recovery From Pandemic

McDonald’s Corp. reported fourth-quarter results that showed strength in its core U.S. market -- but also ongoing weakness in some international markets as Covid-19 continues to hamper the restaurant industry around the world.

Global same-store sales, a key indicator of restaurant performance, fell 1.3% last quarter, the Chicago-based fast-food chain reported on Thursday. That’s slightly better than the 1.5% decline from analysts compiled by Consensus Metrix. In the U.S., where McDonald’s has around 14,000 locations and loads of socially-distant drive-thrus, comparable sales gained 5.5%, also slightly higher than the 5.2% estimate, representing an acceleration from the prior period.

Revenue of $5.31 billion just trailed projections, however, as Covid-19 resurgences and lockdowns in markets such as France, Germany and Spain hurt results. Gains in some countries, such as the U.K. and Australia, were offset by losses in others, illustrating the back-and-forth nature of a pandemic that has stubbornly refused to subside over the last year.

McDonald’s shares rose less than 1% on Thursday. The stock has fallen 3.1% this year through Wednesday’s close, while the S&P 500 Index was little changed in the same period.

The company said restrictions, such as limited capacity and reduced hours, have carried into 2021 in some countries and continue to affect performance. The restrictions “are impacting most of the company’s key markets outside of the U.S., particularly those with fewer drive-thru restaurant locations,” according to its earnings statement.

‘Nothing Structural’

In a call with analysts, Chief Financial Officer Kevin Ozan said the company sees sales bouncing back in weak international markets after restrictions lift. “This is nothing structural, this is a temporary issue,” Ozan said, adding the company is “confident customers come back pretty quickly.”

The coronavirus has reinforced McDonald’s model of drive thrus and low prices, which has allowed it to gain market share in the U.S. despite the upheaval. McDonald’s is also pushing to expand into technology-enhanced ordering and delivery.

Lately, McDonald’s has advertised discounts such as $1 fries through its mobile app while adding new bakery items and promoting its breakfast menu. The company is planning to introduce a loyalty program this year.

©2021 Bloomberg L.P.

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