CHICAGO, June 16, 2020 /PRNewswire/ -- We are providing
comparable sales results and an update on the COVID-19 impact to
the Company's operations ahead of our second quarter earnings
announcement.
Highlights:
- 95% of McDonald's restaurants around the world are open to
serve customers.
- Comparable sales have improved sequentially from late March
through May.
- The Company is investing in the System to accelerate
recovery.
"Our strong foundation and the unique advantages of the
McDonald's System, including a high percentage of drive-thru
restaurants and investments in delivery and digital, have enabled
us to adapt to the changing landscape presented by the COVID-19
outbreak. I am confident in our ability to manage through the
immediate challenges and emerge from this pandemic in a position of
competitive strength," said McDonald's President and Chief
Executive Officer Chris Kempczinski.
"The steps we are taking in response to the pandemic and to
accelerate recovery, while continuing to serve the great and
familiar taste of a meal from McDonald's, will position us well for
the next phase of this crisis. I am extremely grateful to the
entire McDonald's System for their continued dedication to serving
customers safely and the countless other ways in which they support
our communities."
April and May 2020 Comparable
Sales
COMPARABLE SALES*
|
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|
|
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|
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Increase/(Decrease)
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Month
ended
April 30,
2020
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|
Month
ended
May 31,
2020
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|
Quarter to date
through
May 31, 2020
|
|
|
U.S.
|
|
(19.2)
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%
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(5.1)
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%
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(12.0)
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%
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|
International
Operated Markets
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|
(66.7)
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(40.5)
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|
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(53.4)
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|
|
International
Developmental Licensed Markets & Corporate
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(32.3)
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(20.0)
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|
|
(26.2)
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Total
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(39.0)
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%
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(20.9)
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%
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(29.8)
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%
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|
|
|
* Comparable sales are compared to the same period in
the prior year and represent sales at all restaurants, whether
operated by the Company or by
franchisees, in operation at
least thirteen months, including those temporarily
closed.
|
- Comparable Sales:
-
- U.S.: Comparable sales results steadily improved
throughout the months of April and May; however comparable sales
and guest counts remained negative, particularly the breakfast
daypart. Comparable sales continue to benefit from strong average
check growth.
- International Operated Markets: Comparable sales results
for both April and May were heavily impacted by temporary
restaurant closures in the United
Kingdom and France, and to
a lesser extent Italy and
Spain. For markets that have
remained open, sales trends continued to improve in May.
Performance reflects positive comparable sales in Australia driven by strong drive-thru
performance, and negative comparable sales in Germany, Canada and Russia.
- International Developmental Licensed Markets: Comparable
sales results for both April and May were primarily impacted by
temporary restaurant closures across nearly all geographies, most
notably in Latin America. April
and May results also reflected continued negative comparable sales
in China and positive comparable
sales in Japan.
Restaurant Update
Below is a summary of the operating status of McDonald's
restaurants around the world as of June 15,
2020. The Company continues to follow the guidance of expert
health authorities to ensure the appropriate precautionary steps
are taken to protect the health and safety of our people and our
customers.
PERCENT OF OPERATING RESTAURANTS*
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|
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As
of
|
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April 30,
2020
|
|
May 31,
2020
|
|
June 15,
2020
|
|
U.S.
|
|
99
|
%
|
99
|
%
|
99
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%
|
International
Operated Markets
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|
45
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|
75
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|
90
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Australia
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95
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|
100
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100
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|
Canada
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|
75
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|
75
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|
80
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|
France
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0
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|
95
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|
95
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|
Germany
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|
85
|
|
95
|
|
95
|
|
Italy
|
|
0
|
|
95
|
|
100
|
|
Russia
|
|
70
|
|
70
|
|
70
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|
Spain
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|
0
|
|
80
|
|
95
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|
United
Kingdom
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0
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0
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|
70
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|
International
Developmental Licensed Markets
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|
80
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|
85
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|
90
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Total
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|
75
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%
|
90
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%
|
95
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%
|
|
|
|
* Restaurants include those with limited operations
including drive-thru, delivery, and/or take-away.
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U.S.:
- Substantially all restaurants continue to operate drive-thru,
delivery, and/or take-away with a limited menu. Limited hours may
also apply.
- Over 1,000 restaurant dining rooms have reopened with reduced
seating capacity.
- Approximately 100 restaurants remain closed primarily due to
their locations (e.g., unique sites such as malls).
International Operated Markets:
- The vast majority of markets are operating with drive-thru and
delivery (where available) with limited menus and hours. Some
markets are operating take-away and/or dine-in with restricted
capacity.
- As reported in the Company's first quarter earnings release on
April 30, 2020, restaurants in
France, Italy, Spain
and the United Kingdom were
temporarily closed for the month of April.
-
- Throughout the month of May, France, Italy
and Spain began reopening
restaurants. These markets have now resumed limited operations in
substantially all restaurants.
- The United Kingdom began
reopening restaurants in June, and the market plans to have a vast
majority of restaurants operating with drive-thru and delivery by
the end of June.
- Also as reported in the Company's first quarter earnings
release on April 30, 2020, markets,
such as Australia, Canada, Germany and Russia had limited operations, including some
temporary restaurant closures, during the month of April.
-
- During the month of May, Australia and Germany reopened nearly all restaurants,
including dining rooms with restricted capacity.
- While some restaurants in Canada and Russia remain temporarily closed, the markets
plan to have substantially all restaurants operating on a limited
basis by the end of June and July, respectively.
International Developmental Licensed Markets:
- Substantially all restaurants in China and Japan are opened to serve customers, with
limited dining room capacity.
- Brazil has resumed limited
operations in approximately 80% of restaurants.
Accelerate Recovery Through Investments in Our System
In response to the outbreak of COVID-19, the Company has taken a
number of timely, targeted and temporary actions to provide
franchisee financial liquidity assistance, primarily through
deferral of cash collection for certain rent and royalties earned
from franchisees in substantially all markets, enabling them to
continue supporting their workforces and serving their communities.
In addition, as previously announced on May
13, 2020, the Company has committed to further investment in
the System through additional financial support to accelerate
franchisee recovery in three key areas, as outlined below.
Advertising Contributions
The Company expects to
invest about $200 million through an
incremental marketing contribution across the U.S. and
International Operated Markets to accelerate recovery and drive
growth. The amount represents one month of advertising cooperatives
contributions and is in addition to the ongoing contributions from
franchised and Company-owned restaurants. This marketing
contribution will be recorded in the second quarter of 2020 with
the vast majority recorded as Selling, General and Administrative
Expenses.
Targeted Franchisee Financial Support
The Company is
providing additional targeted financial support to those limited
franchisee organizations most negatively impacted across our
System. The Company is analyzing the targeted support needed based
on each individual franchisee's financial situation.
Delivery Support
In a limited number of international
markets, the Company is providing support for certain restaurants
facing unique circumstances, such as those temporarily operating
with a majority of their sales as delivery sales.
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Constant currency results exclude the effects of foreign
currency translation and are calculated by translating current year
results at prior year average exchange rates. Management reviews
and analyzes business results excluding the effect of foreign
currency translation, impairment and other strategic charges and
gains, as well as income tax provision adjustments related to the
Tax Cuts and Jobs Act of 2017, and bases incentive compensation
plans on these results, because the Company believes this better
represents underlying business trends.
Comparable sales are compared to the same period in the prior
year and represent sales at all restaurants, whether operated by
the Company or by franchisees, in operation at least thirteen
months including those temporarily closed. Some of the reasons
restaurants may be temporarily closed include reimaging or
remodeling, rebuilding, road construction and natural disasters
(which includes restaurants temporarily closed due to COVID-19 in
2020). Comparable sales exclude the impact of currency translation,
and, since 2017, also exclude sales from Venezuela due to its hyper-inflation.
Management generally identifies hyper-inflationary markets as those
markets whose cumulative inflation rate over a three-year period
exceeds 100%. Management believes that these exclusions more
accurately reflect the underlying business trends. Comparable sales
are driven by changes in guest counts and average check, which is
affected by changes in pricing and product mix. The goal is to
achieve a relatively balanced contribution from both guest counts
and average check.
Comparable guest counts represent the number of transactions at
all restaurants, whether operated by the Company or by franchisees,
in operation at least thirteen months including those temporarily
closed.
RELATED COMMUNICATIONS
McDonald's Corporation will broadcast an investor conference
call with Evercore ISI over the Internet at 10:00 a.m. (Central Time) on June 16, 2020. A link to the live webcast will be
available at www.investor.mcdonalds.com.
UPCOMING COMMUNICATIONS
For important news and information regarding McDonald's,
including the timing of future investor conferences and earnings
calls, visit the Investor Relations section of the Company's
Internet home page at www.investor.mcdonalds.com. McDonald's uses
this website as a primary channel for disclosing key information to
its investors, some of which may contain material and previously
non-public information.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 38,000 locations in over 100 countries. Approximately 93%
of McDonald's restaurants worldwide are owned and operated by
independent local business owners.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements,
including statements regarding the impacts that the COVID-19
pandemic and our responses thereto may have on our future
operations, which reflect management's expectations regarding
future events and operating performance and speak only as of the
date hereof. These forward-looking statements involve a number of
risks and uncertainties. Factors that could cause actual results to
differ materially from our expectations are detailed in the
Company's filings with the Securities and Exchange Commission,
including the risk factors discussed in the Company's annual and
quarterly filings. The Company undertakes no obligation to update
such forward-looking statements, except as may otherwise be
required by law.
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SOURCE McDonald's Corporation