McDonald's turns a corner even as global COVID risks remain
Leslie Patton, Bloomberg News
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McDonald's Corp. reported its first quarter of global sales growth in more than a year, buoyed by brisk demand in its home market even as Europe continues to lag.
The fast-food chain posted overall same-store sales that climbed 7.5 per cent in the period ended March 31, beating Wall Street's estimates and marking its first gain since late 2019. Comparable sales in the U.S. market, a key metric, soared 13.6 per cent in the first quarter, also outpacing expectations. Global revenue surpassed even first-quarter 2019 levels, it said.
The restaurant chain also boosted its guidance: The company now expects 2021 systemwide sales growth in the mid-teens, excluding any currency impact, better than the "low double digits" it was projecting back in January.
Shares rose less than 1 per cent on Thursday morning at 9:31 a.m. They were up 8.3 per cent year to date through Wednesday, below the wider S&P 500.
In the U.S., where it has about 13,600 restaurants, McDonald's benefited from its new crispy chicken sandwich introduced in February, along with another round of stimulus checks. Even before that, McDonald's and its drive-thru peers have performed relatively well during the COVID-19 pandemic that's upended the dining industry. The company has been leaning heavily into delivery and is working on introducing a new loyalty program in its home market.
Same-store sales in the U.S. were double-digit positive across breakfast, lunch and dinner, the company said on a conference call. That's significant as the morning hours had been particularly hard hit by the pandemic that's shifted America's work schedule and shows things might be getting back to normal.
Still, there are challenges. The Chicago-based company is grappling with a domestic labor market where it's hard to find staff. It's also facing on-and-off virus restrictions especially in Europe, where the company saw negative sales in France and Germany last quarter.
"Resurgences and operating restrictions persist in many parts of the world," Chief Executive Officer Chris Kempczinski said in a statement announcing the results. Dining rooms are closed in about 50 per cent of McDonald's locations in Europe, and that's a big part of the business there.
Likewise, guest counts remained negative in all its segments, meaning fewer customers are placing orders -- even if many spend more each time they do.
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