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4,500 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Thanks, Ian. Earlier this month, we brought leaders together to discuss our goals and objectives as we further establish McDonald's as a leading global consumer brand. As a team, we are committed to act with urgency, cementing our value leadership growing share in areas like chicken and bolstering loyalty through digital customer acquisition, adoption and retention on a global scale, and we are continuing to lean into our three pillars, M, C and D as our blueprint and engine for growth while leveraging technology to transform how we operate across all platforms. Even as the world around us continues to change, we know the power of the McDonald's brand will prevail. We're digital forward, values-driven and culture-led and will continue to reinvent ourselves to meet our customers and restaurant teams where they are today and where they're going tomorrow. With more than 40,000 locations across the globe, we uphold a presence that we believe few in our industry could ever hope to match. We offer the best franchising opportunity in the world, offering a familiar beacon of support for the over 40,000 communities where we live, work and serve. And we're just getting started. We're making progress towards our ambition of 50,000 restaurants by the end of 2027. And when we combine our strategy with great value and high-level execution, we are confident we will further our leadership position. As I close, I want to extend a sincere thank you to our franchisees, suppliers and employees around the world for their continued resilience and unwavering commitment to serving our customers and local communities. And with that we'll begin Q&A.
Operator: Thank you. [Operator Instructions]
Mike Cieplak: Our first question is from John Ivankoe with JPMorgan. |
4,501 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Operator: Thank you. [Operator Instructions]
Mike Cieplak: Our first question is from John Ivankoe with JPMorgan.
John Ivankoe: Hi. Thank you very much. Certainly, McDonald's has access to consumer data, consumer information that almost no corporation in the world does. And when I consider six months ago, 12 months ago, it was fairly well known. The restaurant industry would see a fairly wide pricing gap versus grocery and many consumers would have drawn down their excess savings from COVID, that we would be in an environment where value quite frankly, would be more necessary. So I just wanted to get a sense of really what changed so significantly from the consumer's perspective relative to your expectations in the last 6 to 12 months? And if I can, how McDonald's kind of pivots itself from being reactionary from a value perspective from a consumer trend perspective, to more anticipating changing needs before they happen as opposed to after? Thank you so much. |
4,502 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Hi, John. Thanks for the question. You're right in that last year, you may remember we were talking about there being pressure on the consumer and particularly that low-income consumer that was notable in a few of our major markets. And what has happened in the intervening period of time is that we've seen more markets have the same sort of slowdown. And it is certainly most pronounced with that low-income consumer, but we're also seeing an impact with larger groups, particularly around families in Europe that we're seeing this as people are just looking to economize. You're also right that we're looking at a continued gap between food at home and food away from home inflation. The gap is about 3% right now or a 300 basis point gap between the two. So you are seeing consumers being much more discretionary as they treat restaurants. You're seeing that the consumer is eating at home more often, you're seeing more deal seeking from the consumer, and you're just seeing, I think, a trade down even within either units per transaction or within mix, all of those things for us are indicators that the consumer across a number of these markets is being very discriminating. And I would point out consumer sentiment in most of our major markets remains low. And so your point around how do we make sure that we're anticipating where these customers are going and what the value is required. I think it's a fair question. And what we've done is, in a number of places, you've seen us and heard us talk about what we're doing with McSmart, what we're doing with McSaver some of the things that we've put in place in the US. But I think it's also clear to us that in several markets in a number of markets that you need to have a broader value platform and that trying to move the consumer with narrow offerings that are one item or a few items is just not sufficient for the context that we're in. And so what's going on in markets around the world is looking at how do we further broaden what some of the value platform |
4,503 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | in. And so what's going on in markets around the world is looking at how do we further broaden what some of the value platform offerings could be as we also perhaps look for other places that we can dial down. And that conversation, as you know, with our franchisees, takes a moment, it's not something that happens immediately, but I would say that there's good recognition across our franchisee base that we need to be providing value. We need to be providing a broader level of value and at the same time, we've got a lot of other levers. So this is not all about value. We've got levers around what we can do from a menu standpoint. We've got some great equities that we need to be driving there. And there's more we need to be doing from a marketing standpoint and stepping up by marketing. So I'd say the changes that we're working on and talking about with our markets, yes, it's around value. It's making sure that as we're facing certainly a more difficult environment than even what we anticipated last year that we've got that value offering, but we're also using the other things that are at our disposal to get this business back to where we know it should be performing. |
4,504 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from David Palmer with Evercore.
David Palmer: Thanks. Congratulations, Mike. Thank you for your help all through the years. As far as the question, I guess, I'd like to focus on the IOM countries. How do the challenges in your key markets differ from the US in terms of market share versus the informal eating out sales trends? In the US, it feels like McDonald's is still in a state of searching and perhaps negotiating to find the right value message ahead of menu news that might happen later. Are you at a similar stage of searching and perhaps negotiating with franchisees about value overseas? Where are you in terms of how satisfied you are where you are in terms of the value message? Thanks so much.
Chris Kempczinski: Yes. Thanks, David. I'll have Ian start and then if there's anything I need to add, I'll do that. But Ian, I'll let you start. |
4,505 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Sure. Good morning, David. Thanks for the question. Look, I mean, I'll just start, I think, with a bit of context, which is, as you heard Chris in his opening remarks, talk about, I mean, I think the pressures on the industry and consumers that we're seeing are broad-based in nature. And I think if you look across our IOM markets, which you will know historically, I think we've had -- have been a real strength to our system. I think that external pressure has heightened and I think certainly gotten more significant in several of those markets through the second quarter. And so I think it's still what I'll call an evolving situation. We've talked a lot about value and affordability over the last couple of quarters. As you know, we've kind of highlighted McSmart, which is an entry-level meal, affordable meal option that we put in place in Germany at the beginning of 2023 and Germany has been consistently one of our most strongly performing markets even in a much more difficult context over the last couple of quarters in the marketplace. So I think it's -- part of it is just the evolution of what's happening with the consumer, what's happening with the industry. I think we have strong alignment engagement with our franchisees across our international markets. I think we're working very collaboratively and constructively to get the right programs and platforms in place from a value and affordability standpoint. I think part of it's just been the landscape in the consumer is evolving and those platforms and offers have needed to be sharpened and I think better positioned to be delivering in the current context. And so I think we're -- we're moving with speed and pace, as you've heard us talk about before, but the environment, I think, has been changing and context has been evolving. And I think we're just trying to get ahead of that as we've talked about in kind of our opening remarks. |
4,506 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: What I would just add is if you look at our IOM markets, the good news is if you think about Germany with McSmart, you've got Canada with McPick, you've got the UK with McSavers menu, Australia has McSmart and also Loose Change Menu, France has McSmart. We have the value platform established in those markets, and there's good consumer awareness of those value platforms. The work that's underway and Ian alluded to this is making sure that underneath those value platforms that we have the right items at the right price points to reflect where the market is at today. And so there are markets like the UK, for example, where they're making changes to the menu in France as well. They're adding a four-year happy meal. So there's changes that are happening underneath those value menus to make sure that we are appropriately positioned for what we see now as the market context. But the fact that we have those menu platforms established that there's good awareness on those I feel like that is a positive versus in the US, where obviously they're starting to do a little bit more work about what the long-term value platform is going to look like.
Mike Cieplak: Our next question is from Brian Harbour with Morgan Stanley. .
Brian Harbour: Yes. Thank you. Good morning. I had a question on digital, right? Because obviously, it's continued to grow. You've continued to add members there's actually a lot of really good value available on that platform, but it hasn't really offset some of the sales challenges that you're seeing right now. So I guess what gives you kind of the confidence that, that could change? Or what do you think needs to be done differently there? Do you think it's kind of resonating? And is that a place to continue to drive value going forward? |
4,507 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yes, it's a great question. We feel really good about our digital business, and we're seeing strong performance on the digital business, as I alluded to in the opening. I think the challenge on digital right now is basically only about 25% of our customers are on digital in terms of identified customers. And so as you think about what you need to do to drive the overall business, we just don't have digital yet at the size and with the penetration that's needed to move the entire business. And I think some of what has happened as you started to look at things is we probably were a little over rotated on digital versus broad everyday value that we're offering available to all consumers, those who maybe aren't yet on our digital platform. So that's the work that's underway. I think in time, certainly, as you know, digital is going to continue to grow for us. We're going to get more and more customers on our digital platform. And I think in a couple of years' time, particularly as you get to 250 million users, that's a different conversation about how digital can drive value. But today, we just don't have the penetration where we need it to be to move to 75% of the business that's not on digital. And so that's the value work that we just have been talking about.
Mike Cieplak: Our next question is from David Tarantino with Baird.
David Tarantino: Hi. Good morning. A couple of questions on the US value initiatives. First, I was hoping you could elaborate on the effectiveness of the $5 meal deal that you're running and whether you're seeing the sales or traffic inflection you had anticipated from that program. And then secondly, I think, Chris, you mentioned it's necessary to have more of a platform idea in all of your key markets. And I'm just wondering, in the US, how those conversations are going with franchisees and whether franchisees are supportive of a broader national value platform and when that might happen? Thanks. |
4,508 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Thanks, David. I appreciate the questions. Relative to the $5 meal deal, it's really performed and done exactly what we wanted it to do. First, we wanted to see a change and improved brand perceptions around value and affordability, and it's done that. We wanted to make sure that it connected with the single user, especially the lower income consumer. And we've seen that through increasing trial rates by that consumer base. Our two lowest income cohorts, the under $45,000 cohort and the $45,000 to $75,000 cohort, saw an increasing trial and participation around the $5 meal deal throughout the life of the promotion, which was incredibly encouraging. And then lastly, obviously, we wanted to see a shift in guest counts to drive both the short- and long-term health of the business. And ultimately, I believe, in guest count-led growth. And while it's begun to do that, it hasn't yet translated into sales. The average check though has been over $10 for the $5 meal deal. So we do feel comfortable about the add-on that's happening as part of that program. Relative to the longer-term platform, obviously, this is a big investment for us and our franchisees. When you think about the dollar menu, which existed for over 10 years and when you think about Dollar Menu 1, 2, 3 that's been in place now for over six years, we just need to be very thoughtful and considered as we work through what our national everyday value and affordability platform will be. That work is happening and good partnership with our franchisees. And so we're comfortable that we'll get to the right answer. There's no question that the franchisees see the impact and the importance of a national everyday value and affordability platform. And so we're working through that at pace with them. In the meantime, obviously, we're continuing to offer consumers great value with the $5 meal deal extending in 93% of our restaurants into August, and we're working with our franchisees to extend that even longer. We continue to offer great value via |
4,509 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | into August, and we're working with our franchisees to extend that even longer. We continue to offer great value via the app, which Chris just talked about a bit. We also continue to have a lot of local deals at what we call our business unit level. So we'll continue to squarely offer our consumers value throughout the summer and into the fall. |
4,510 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Sara Senatore with Bank of America.
Sara Senatore: Great. Thank you. I wanted to ask about the sort of margin implications. And in particular, maybe talk about whether you'll need additional franchisee support for either US or IOM, specifically, I know we seem to be seeing actually some deflation in some beef trimming and other cuts, which is very different from what we have been seeing. So to the extent that you are offering more value, you'll have a permanent value platform. Is some of that funded by lower input costs such that maybe there's less margin pressure? Or is that something that you'll have to address with franchisees. I know in IOM markets, you had given some franchisee support. I'm not sure where that stands now. But is there any contemplation of again investing either behind franchisee or perhaps contributing to marketing fund. Anything from McDonald's corporate to help, I guess, lessen the burden. Thanks. |
4,511 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Good morning, Sara. It's Ian. I'll start and then I think maybe Chris or Joe might jump in at the end. Look, I mean, I think as you said from a margin pressure standpoint, I mean, obviously, the top line performance has been more muted. So that obviously creates a level of pressure. But I think if you use kind of our McOpCo margins as a bit of a proxy you would have seen that they've held up pretty well through the quarter simply because, as you noted, we're certainly seeing much lower levels of inflation in areas like food and paper, which are down at the kind of low single-digit level. I mean, obviously, labor inflation, particularly in the US, is a little higher still, especially with some of the minimum wage changes in places like California. I think in terms of just kind of maybe kind of trying to answer your -- the broader part of your question, I mean, value and affordability is kind of a fundamental part of our business model. And I think our owner operators understand that and obviously understand that, that's something strategically that we always need to have in place as you would have heard us talk previously about, I mean we don't subsidize pricing. So we want to get to the right outcomes and do that on a way in a way that it's going to be sustainable and profitable for both our operators and for McDonald's. And I think over time, we know that strong affordability and value is what drives volume-led growth, as you heard Joe touch on and volume, obviously, is ultimately what drives sustainable profit and cash flow for the business and for the system. I think as we get some of these ideas in place, obviously, we want to bring them to life in creative and effective ways, and we're going to put all of the resources of our system against making sure that we execute this and put ourselves in a position to win in a difficult environment. But I may just kind of let Joe or Chris weigh in. |
4,512 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Joe Erlinger: Yes. I would just add, I mean, our franchisees in the US are in a very strong financial position. And so they have the financial firepower, both in terms of cash flows as well as equity to make investments and they can make those investments across their P&L. If you actually look at gross margin in the 20 years pre-COVID, we're actually at a high right now versus those 20 years. So we feel very good about the ability of our franchisees to invest via their P&L or otherwise. And we are working through with them right now look at the overall profitability of the $5 meal deal. But we think they've got the ability to invest. And so we're comfortable with the position in the US.
Chris Kempczinski: Yes. My only add is I just would underline the word that in use, which is sustainable. We're only interested in doing things that are sustainable strategies that we can continue. And so that's going to be our guide as we think about where we need to go on these things. And there is a lot of, I think, strength within our system, financial strength within our system to implement the necessary changes, but they have to be sustainable for us.
Mike Cieplak: Our next question is from Dennis Geiger with UBS.
Dennis Geiger: Thank you, and thanks, Mike, for all your help, best of luck. I wanted to focus again on the meal deal. I appreciate all the insights there. Specifically, as it relates to customer awareness in the US of the meal deal and sort of thinking about the marketing message or the marketing intensity, is that something you could help us frame up for us where it is right now? Is it something that ramps and kind of related, just thinking about the time line generally from a new market -- a new value platform or a new bigger value offer to guest count contribution. Is there a way historically in environments like this to kind of think about how that time line looks. Thank you. |
4,513 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Joe Erlinger: Yes. I think what we're learning from this is the power of our national voice McDonald's. As we exited 2023, we looked at the value that we had at a local level and felt very comfortable that, that value was compelling. But what we last was obviously a strong national voice and it took us some time to work with our franchisees to achieve that national voice. And as we talked about, the $5 meal deal is something that already existed in Upstate New York and when you look at -- when we apply that national voice, what happened in Upstate New York, which already had the deal, trial and participation rates actually doubled in Upstate New York. And so you also see then the power of the actual message, the importance of a message actually being price pointed. As you know, we have a BOGO, buy one get one promotion that we've run in January. And we saw a trial in participation rates for the $5 meal deal 70% greater than that January buy one get one window. So that is the power of national marketing, the awareness that brings. I won't get into specific numbers around awareness. But certainly, when we launch our new national everyday value and affordability platform, building awareness of that platform will be absolutely critical, just like we've done, obviously, in the past with Dollar Menu $1 $2 $3 at a dollar menu.
Chris Kempczinski: My only add on the PACE question is that ultimately is on us. There's nothing externally that drives the PACE. It's all an internal thing. And so we've seen in some markets like France, for example, where there's strong alignment, we can move very quickly in other places, it requires more conversations because of the breadth of the changes. But at the end of the day, we've shown the capacity to move quickly and my hope would be certainly that in a market like the US. I think Joe and the team are having great discussions with franchisees about the importance of getting to that value platform that we've talked about. |
4,514 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Jeff Bernstein with Barclays.
Jeffrey Bernstein: Great. Thank you very much. Just looking outside the US, perhaps, I was hoping to touch on France and China. France, I'm just wondering if you think it's more of a McDonald's specific issue, which I think is what maybe you referred to in the past versus a macro issue and how you view the competition there. And then in China, I know you mentioned that consumer is less confident. I'm just wondering if you're seeing anything to give you pause on an otherwise aggressive unit growth outlook or maybe a change in strategy, whether you're seeing any US brand pushback or anything along those lines would be helpful. Thank you. |
4,515 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Sure. Thanks for the question, Jeff. Well, starting with France, certainly, what we've seen in France has been a slowdown. But I think you're also accurate in reflecting that the fact is we're losing share in France. And that suggests to me that there is still an opportunity for us to improve our performance. A couple of things for us. One that we've talked about in the past has been it is a very competitive market right now. We're seeing a competitor there who's being aggressive on pricing. Certainly, that's one element. And I've talked about some of the things we're doing to enhance our McSmart menu to make sure that we're competitive on pricing. Second, because France has such a meaningful business with families. Families is key consumer for us over there. That's where they're coming back with the EUR4 happy meal, so that's addressing the family issue. And then we are also looking at what can we be doing to make sure that we're engaging with customers around where our brand is positioned. France is one of the markets that has a higher Muslim population. And so when you think about the Middle East, the impact that we're seeing in France has been more than maybe in other markets because of that population. So there's a lot that the team is looking at doing on how do we make sure we're telling our story from a marketing standpoint at the local level. But I think it's fair to say that we have an opportunity to get back to share growth in France. The market has slowed down, but the market is still delivering modest, very small growth, and we want to participate more in that. In the case of China, China is a very competitive environment right now. And as you've seen from a number of other consumer companies, it is highly promotional. Consumer sentiment in China is quite weak, and you're seeing both in our industry and across a broad range of consumer industries, the consumer being very, very much deal seeking. In fact, we're seeing a lot of switching behavior in terms of just consumers, whatever |
4,516 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | being very, very much deal seeking. In fact, we're seeing a lot of switching behavior in terms of just consumers, whatever is the best deal. That's where they end up going. Positively in that environment, one, we're holding share. So our business in China is holding share. And the second thing that I would say is that we are still seeing good returns on our new unit openings. So there's, from our vantage point, a lot of runway around growth on new units. And we are laser-focused on the returns that we get from new units. If those were to ever dip below what we would consider to be an acceptable return threshold. We would certainly relook at our opening pace in China. But right now, what we're seeing is that the returns on new openings are holding up. And so from our vantage point, the 1,000 restaurants per year base that we've been on, we're still working toward that number in 2024. |
4,517 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Joe Erlinger: Jeff, I might just hook on to Chris because I just want to -- I know you were asking about France, but I think it is important just to kind of reinforce a little bit of what we touched on earlier, which is, I mean, I think the external trends and pressures that we're seeing on the industry on the consumer, I think, are broad-based across IOM. I think consumers are being, as you've heard us say earlier, more discerning about where, when and what they eat. And I would say we don't expect significant changes in that environment for the next few quarters. So obviously, as you've heard us talk a lot about, we're kind of laser-focused on this forensic review of kind of our value and affordability positioning in each of our key markets. We're going to position ourselves to win, and we're moving, I think, with a sense of urgency, but obviously, at the pace to get that right. And as you've heard us talk a lot about, we've got the system strength and know-how to push us in that winning position. I would just say, I think the third quarter has certainly started similarly to how the second quarter ended, and we're seeing, I think, negative comp trends across IOM and frankly, across each of our three operating segments.
Mike Cieplak: Our next question is from Eric Gonzalez with KeyBanc.
Eric Gonzalez: Hey, good morning, and thanks for the question. I'm just curious about trade down. In the past McDonald's was thought of as a defensive option because in economic downturn, it would pull share from more expensive categories. So I'm just curious why you think you might not be getting the trade down that you depended on in the past? And whether that's a function of value perception or something that could be addressed in the new value construct. Thanks. |
4,518 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yes. Thanks, Eric. Well, I think we are seeing trade down, but what we're seeing is that the loss of the low-income consumer is greater than the trade down benefit. And so you're seeing with that low-income consumer, in many cases, they're dropping out of the market, eating at home and finding other ways to economize cutting down on trips. So we are seeing the benefit of trade down, but it's just not enough to offset the pressure that we're seeing on that low-income consumer.
Mike Cieplak: Our next question is from Lauren Silberman with Deutsche Bank.
Lauren Silberman: Hey, thanks you, guys. I wanted to follow-up on how you're thinking about comps in the back half of the year. So quarter-to-date still running negative. Should we -- are you expecting that to, I guess, continue through the third quarter when can we start to talk about positive comps in the back half of the year? Is it fourth quarter as a base case right now? Any commentary there would be helpful. Thank you. |
4,519 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Hi, Lauren, it's Ian. So just maybe just to reiterate a few things. I mean, I think, as I said, the pressures are broad-based. We're seeing those pressures, I think, on the industry and on the consumer across almost every one of our large owned markets globally. And as I said, I don't think we -- I don't -- we certainly don't profess to have a, I think, a crystal ball on how the future will look like, but we don't expect that we're going to see a change in that environment over the next few quarters. I mean, I think that's why we're laser focused on getting value and affordability right. As you heard Chris just say, I think it's not even so much about consumers moving from us to others. It's about consumers in that low-income category. And I think families, which are obviously two big cohorts of our consumer base across most of our markets, just eating out less frequently than they have been previously. I think we're confident that if we get our value and affordability propositions, right, if we get them into that winning position in each marketplace, that will encourage consumers to come back when they can. And I think if you take examples of what some of our markets done, I'll use the UK as a bit of an example that ran a campaign in the end of May, beginning of June, a 3 for GBP3 mix and match campaign. They also have done a GBP1.99 Happy Meal offer in the app. When we run compelling affordable options like that, we know we're able to draw consumers back and we know we are best positioned to be able to do that. So that's certainly what we're focused on. As I said, certainly don't claim that we can predict. I think when the environment will turn or when the consumer will turn. I think what we're focused on is making sure that we're winning in the current context in each and every one of our markets. And that we're positioned to accelerate our momentum as this challenging environment begins to turn in each and one of our markets as we look forward. |
4,520 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yes. The only thing I'd add is McDonald's at its essence, this is a growth business. And so we're not accepting negative comps as just sort of the way it is because of the consumer headwinds. We absolutely are committed to getting this business back to growth foundation of that is the value platforms that we've talked about, but we need to do more on menu innovation. We've got more levers that we can do on digital and certainly getting our marketing to be more of a contributor as it was last year. I think all of those things need to work in combination to get the business back to where we know its rightful place is.
Mike Cieplak: Our next question is from Brian Bittner with Oppenheimer.
Brian Bittner: Thanks. Good morning. Chris, you said in your prepared remarks that your value leadership gap versus the competition has shrunk. And I'm just curious how are you measuring this gap what informs you that it has shrunk. And just secondly, what gives you the confidence you can reignite this gap with value at a time when everyone seems to be getting much more aggressive on value? Is it the success you're seeing with the $5 deal or what else is feeling the confidence that this gap can reignite? |
4,521 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Sure. Thanks for the question. So there's two ways that we measure value. They're both consumer-based surveys. But one is we get to just the overall brand impression and we survey consumers around the world for their brand impression of how McDonald's does on both value and affordability. Affordability being a more specific thing around typically price points, value being a broader metric that speaks to a number of different things. So it's all survey-based. Like I said, there's part of it, which is looking at brand image. And then we also have a second survey that we do around most recent experience and that gives us a little bit more of a current snapshot of where we are seeing the consumer. And it's been particularly on the most recent visit that we're seeing our leadership gap is shrinking. Our brand image scores around value and affordability. We still are very strong there and we're seeing those gaps hold up. But on the more recent visit that we are seeing some of the pressure, some of the decrease, still leading, but that margin may be shrinking a couple of points in a market, for example. In terms of what gives us confidence about our ability to continue to lead on value, it starts with the fact that for 70 years, we've led on value. And for 70 years, we've led on value because it's what the brand stands for. And frankly, we can buy food and paper at a better price than anybody else. So we have an underlying competitive advantage that we can buy at a lower price than anybody else in our industry. The other thing is the way that the consumer defines value, yes, there's a price point component to it. But the other thing that we see in all of our value work is that there are intangibles that consumers think about around how they define good value or not. Things like, for example, how convenient is the restaurant, things like, for example, how clean the restaurant is, things like how tasty is the food. Those typically are representing maybe 25% to 30% of consumers' value perceptions. So |
4,522 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | is, things like how tasty is the food. Those typically are representing maybe 25% to 30% of consumers' value perceptions. So it's not just about hitting low price points. It's also the overall experience you can deliver. And as you've heard us talk about in the past, our restaurant estate is in great shape. Our restaurants are running strong execution, service times are improving around the world. CSAT scores are high. So I think we've got a lot of things from the intangibles that are working in our favor. And as you've heard us talk about on this call, there's other things that we're doing to make sure from a value standpoint and particularly around value platforms and products and price points that where the consumer expects us to be. |
4,523 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Brian, I might just do two little hooks on Chris' just on that second bit about why we can win. I mean I just I wouldn't underestimate the power of the equity we have in some of our menu items that when we get those items priced at the right price point in the current context for consumers, I think that's unique to us the scale and level of marketing dollars we have available as a system that we can direct to support these platforms that we get -- as we get them in place is unmatched. And then I'll just double-click on what Chris touched on the experience. I mean we've talked the last couple of quarters. I think Joe would talk to the fact that our customer satisfaction scores in the US are at kind of an all-time high for this point in the year. We're seeing that pretty consistently around the world. We're getting faster, we're delivering a better experience. And when you put all that together, that's what kind of defines value for the consumer. And we certainly are adamant and relentless that we're going to get that right in each and every market to be in a winning position.
Mike Cieplak: Our next question is from Jake Bartlett with Truist.
Jake Bartlett: Great. Thanks for taking the question. Mine was just really a clarification on your commentary about recent trends. And that's the US. And I think, overall, you said that the third quarter is starting as the second quarter ended I just want to make sure that, that's true for the US. And I guess if that's true, and it would, I think, implies below what was reported for the second quarter. If that's true in the commentary that the $5 meal is doing what you hoped, how does that match? It seems like the $5 meal you're happy with, but it doesn't seem to have really driven an improvement. Just want to make sure I understand the commentary there on recent trends and what's driving it. |
4,524 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: That's right, Jake. So we obviously exited the second quarter as we lapped the Grimace Birthday Meal and Shake with negative comps. And then we have experienced negative comps here in July. The success, obviously, we've seen is the shift in traffic that we're experiencing. And in my 22 years of experience at McDonald's, traffic and guest counts usually comes before sales and so we've got some exciting promotions up coming here in the second half of the year. And we think that if we can get the traffic moving, we'll see customers obviously willing to spend more. Remember that the customer that's coming in for the $5 meal deal, they are buying more than just the $5 meal deal because we see that average check-up around a little over $10. So that's why we feel strongly about how the $5 meal deal is connecting in the marketplace and specifically with that low end consumer, which has been our opportunity.
Mike Cieplak: We have time for one more question with Jon Tower at Citi.
Jon Tower: Great. Thanks for taking the question. Maybe just a similar line of thinking in terms of your expectations for store margins for the balance of the year. Obviously, you've got some good guys with respect to inflation coming off, but I think pricing is also rolling off a little bit, and now it seems like promotional activity is going to be ramping. So how should we anticipate the impact on store margins both in the US business and the IOM segment for the balance of '24 and perhaps into early '25? |
4,525 | MCD | 2 | 2,024 | 2024-07-29 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Hi, John, it's Ian. Let me try and get that one. Well, look, I think as you would have seen through the first half, even with more muted top line growth. Restaurant margins have held up pretty well. Obviously, as you noted, we will take or certainly expect to take less pricing through the year, just obviously managing through the current context we're in. We still got a fair bit of carryover pricing from 2023. So that certainly helps a little bit. And as I talked about earlier, certainly, inflation on food and paper and other cost items outside of wages has come down substantially from where it's been over the last couple of years. So that's helpful. The US, obviously, as I talked about, we've got the wage pressures, particularly from California. So that's certainly a headwind that we're working through. And I think overall, if you think about the year, I think we certainly expect, if I use company-operated margins as a proxy for those to be down a little bit from where we ended in 2023. But I think pretty good in terms of when you consider the overall context of what we're working through this year.
Mike Cieplak: Okay. That concludes our call. Thank you, Chris. Thank you, Ian. Thank you, Joe. Thanks, everyone for joining. Have a great day.
Operator: This concludes McDonald's Corporation Investor Call. You may now disconnect and have a great day. |
4,526 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Operator: Hello, and welcome to McDonald's First Quarter 2024 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. [Operator Instructions]
I would now like to turn the conference over to Mr. Mike Cieplak, Investor Relations Officer for McDonald's Corporation. Mr. Cieplak, you may begin.
Mike Cieplak: Good morning, everyone, and thank you for joining us. With me on the call today are President and Chief Executive Officer, Chris Kempczinski; and Chief Financial Officer, Ian Borden.
As a reminder, the forward-looking statements in our earnings release and 8-K filing also apply to our comments on the call today. Both of those documents are available on our website as are reconciliations of any non-GAAP financial measures mentioned on today's call along with their corresponding GAAP measures.
Following prepared remarks this morning, we will take your questions. [Operator Instructions] Today's conference call is being webcast and is also being recorded for replay via our website.
And now I'll turn it over to Chris.
Christopher Kempczinski: Thanks, Mike, and good morning, everyone. I join you today inspired from our recent worldwide convention, a time when McDonald's comes together to celebrate the success of our system, the relevance of our brand, power of our Accelerating the Arches strategy and the collective strength of our system were on full display as we welcomed our global McDonald's franchisees, restaurant teams, suppliers and company employees to Barcelona.
For the first time in our nearly 70-year history, we held this biennial reunion outside of North America, a testament to the global power of our brand. And we're joined by more than 15,000 attendees from nearly 100 market to discuss how we're reimagining the future across our three-legged stool. |
4,527 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | It's clear that McDonald's continues to operate from a position of strength across nearly all areas of the business as we focus on executing the day-to-day at a high level and establishing strong platforms for long-term sustained growth.
The first quarter of 2024 marks our 13th consecutive quarter of positive comparable sales growth with 30% growth over the last 4 years. This success was built by establishing a strong foundation with our strategic plan based on consumer insights and focused on creating relevant marketing campaigns with our brand connected to culture.
At the same time, we're maximizing the strength of our core menu equities and building an industry-leading loyalty base. Combined with our modernized restaurant estate, strong franchisee alignment, engaged restaurant employees and strong restaurant level unit economics, McDonald's is well positioned. This winning formula continues to drive results and our customers visiting our restaurants today can easily see our commitment to providing them with a great experience, evident through our strong customer satisfaction scores.
As I reflect on the first quarter of the year, it is clear that broad-based consumer pressures persist around the world. Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending, which is putting pressure on the QSR industry.
It's worth noting that in Q1, industry traffic was flat to declining in the U.S., Australia, Canada, Germany, Japan and the U.K. And across almost all major markets, industry traffic is slowing. In the context of a difficult macro environment for the industry, we know our customers are looking for reliable everyday value now more than ever. That has always been our promise: to deliver delicious feel-good moments at an affordable price each and every day. |
4,528 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Staying on the side of the consumer and executing against our plan is our model for driving long-term growth regardless of the broader landscape. This was the case nearly 70 years ago when Ray Kroc opened the very first McDonald's, and this remains just as true to this day.
As consumer pressures have mounted, we've reacted with agility to proactively meet evolving customer needs. For example, over the past year, we've launched everyday value menus across many of our international markets, including all 5 of our big IOM markets. Featuring value bundles at various price points, these new offerings provide smaller, more affordable meals to our customers.
In Germany, our McSmart menu has continued its strong performance with record units sold during the first quarter. And in other markets like Spain, our everyday value menu features a convenient bundle for every price point, which continues to drive results.
I recently spent time with our market team in Poland and experienced firsthand their renewed focus on value in an environment where significant inflation has created challenging consumer dynamics. In light of these challenges, I was impressed by the market's ability to quickly identify an opportunity in their everyday value offerings to implement a new entry-level value platform, which is driving traffic back into our restaurants.
And in France, a market which I flagged last quarter, I've been impressed by the speed with which our team and franchisees have moved to address their opportunities. The market now has established their own McSmart value menu with high consumer awareness, which is driving encouraging progress in their business trends. |
4,529 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | It's clear that McDonald's offers delicious food at a great value, and customers continue to tell us this through our survey work. That said, we must be laser-focused on affordability, which means good entry-level price points available every day. In the markets where we're doing this well, the business is outperforming. In some markets, however, it's clear we still have opportunities to strengthen our proposition.
As we continue to take a One McDonald's approach to solving problems, the unique size and scale of the McDonald's system gives us the ability to learn from each other. And it's examples like our success with the McSmart value menu construct that we will look to replicate further. McDonald's has a long history of being the go-to destination for value and it's imperative that we continue to keep affordability at the forefront for our customers. We literally wrote the playbook on value, and we are committed to upholding our leadership within the industry.
As we've done for the last 70 years, our teams in those markets are working closely with our local franchisees to balance menu pricing decisions with the right affordability strategy in place, and where needed, get more aggressive with our value offerings.
Despite the elevated cost environment we've navigated over the past couple of years, average franchising cash flow and the corresponding margins remained strong. And thanks to the financial strength of our restaurant P&Ls, we have the ability to invest in these traffic-driving initiatives.
Despite these ongoing challenges and pressured consumer spending across our segments, we delivered global comparable sales growth of nearly 2% in the first quarter. And we continue to raise the bar on the customer experience in our restaurants with a focus on strong execution. This is driving improved service times and higher levels of customer satisfaction across our markets. |
4,530 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | In challenging times, there is significant power in focusing on what's within our control to maximize the impact of our strategic plan: offering our customers delicious food at unparalleled value and convenience. And it's exactly this approach that will continue to drive growth. McDonald's is best positioned to win in the industry because when we combine our strong system alignment with our fully modernized estate, a globally recognized brand, delicious food on our core menu and the highest level of execution across our 4Ds, no competitor could match us.
As consumer spending remains pressured and macro headwinds continue, we are laser-focused on maintaining our competitive advantages and growing QSR market share.
With that, I'll turn it over to Ian to talk more about our Q1 results.
Ian Borden: Thanks, and good morning, everyone. As Chris mentioned just a few minutes ago, strong execution against our strategic plan delivered global comp sales of nearly 2% for the first quarter, driven by growth across our U.S. and IOM segments. As we've said before, as customers continue to be more intentional with the dollars that they spend in a pressured economic landscape, we expect moderated top line growth this year.
In our IDL segment, positive comp sales in Japan, Europe and Latin America were offset by the impact from the ongoing war in the Middle East. We remain proud of the way our system continues to show up for customers every day, and we continue to work closely with our DL partners to support local communities in the region.
It's during times like this that I'm once again reminded of the resilience of the entire McDonald's system and our ability to deliver delicious, feel-good moments to our customers in any environment, which I've seen time and again in my 30 years with McDonald's. |
4,531 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | We continue to drive a One McDonald's Way approach to our creative excellence this quarter, combining local cultural relevance with global reach to engage a new generation of McDonald's fans. In more than 30 markets around the world, including the U.S., we tapped into a new global community with a truly unique brand campaign.
While McDonald's has long been an enduring brand across communities, in anime, we're known as WcDonald's, a fictional restaurant we brought to life for our fans this quarter. By featuring our Chicken McNuggets, alongside a new dipping sauce, theme packaging and bonus gaming content with a mobile app purchase, we created brand excitement and lifted McNugget category sales. Our fans' passion for the McDonald's brand and for the WcDonald's universe quickly spread across social media in the U.S. with over 6 billion impressions and nearly 100,000 mentions.
Our delicious burgers were also featured across many markets this quarter as we continued to showcase our strength in beef with a consistent approach to improving our fan favorites. Now deployed in over 80% of our restaurants globally, Best Burger was recently introduced in France this quarter, delivering hotter and juicier burgers. Early results were promising with lifts across our core burger categories and improved customer satisfaction in both our taste and quality scores.
And in the U.S., where we're now fully deployed across the country, we celebrated the national launch of Best Burger with an iconic character at the center of our advertising. Tapping into the nostalgia of the Hamburglar, the campaign drove a significant lift in the Big Mac category and contributed to record customer satisfaction scores in the market. |
4,532 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | The progress we've made with our core burgers highlights what McDonald's can achieve when we tap into the full power of our system, size and scale. We'll continue to showcase that small changes can add up to deliver big improvements to both taste and quality by scaling Best Burger to nearly all restaurants by the end of 2026.
And as we look to further build on our leadership in beef, our team of chefs from around the world have created a larger satiating burger. We'll be testing this burger in a few markets later this year ensuring that it has universal appeal before scaling it across the globe.
We also celebrated our menu in the mobile app this quarter, combining the strength of our core equities with new and exciting digital experiences for our customers. Across our top markets, digital penetration is growing as evidenced by our increased loyalty sales and record mobile app orders, leading to greater frequency and increased spend by loyalty customers.
We're also growing digital share as we leverage learnings from across markets in areas like gamification. Australia featured McDonald's World Famous Fries at the center of a digital campaign and offered customers a chance to win by digitally redeeming their game pieces. Powered by a seamless digital experience, the campaign resulted in incremental customer acquisition and increased the market's loyalty sales.
The U.K. market also drove strong loyalty results with the return of their Winning Sips digital experience, encouraging customers to add a drink to their order with a chance to win on every cup. Customer engagement in the mobile app increased with digitally redeemed game pieces, and we drove record growth in 90-day active users in the market. Because of unique digital experiences like Winning Sips, our loyalty members continue to engage more frequently with nearly 75% of our total loyalty user base in the U.K. active during the last quarter. |
4,533 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | We know the experience we provide, whether through our mobile app or in our restaurants, is a significant driver of how often our customers choose to visit McDonald's. But providing our delicious food at the right price is equally critical, especially in today's environment, where consumers all over the world are paying more for everyday goods and services. As Chris mentioned a few minutes ago, a strong value proposition continued to drive results within several of our markets this quarter.
This consumer-centric approach to providing our customers with compelling value at affordable price points continued to drive strong results in markets like Germany, Spain and Poland and led to QSR market share gains. As we remain agile to meet the needs of our customers around the world, we'll continue to use our size and scale for the greatest impact, sharing what is working to drive consistency and enable speed.
Turning to the P&L. Our global top line growth drove adjusted earnings per share of $2.70 for the quarter, an increase over the prior year of about 2% in constant currencies.
Adjusted operating margin for the quarter was nearly 45%.
Despite the pressured consumer spending environment we've discussed this morning, top line results generated nearly $3.5 billion of restaurant margin for the quarter, an increase of about 4% in constant currency. This was partially offset by higher G&A costs as we continue to invest in our strategic transformation efforts and growth opportunities such as digital, as well as costs associated with our biennial Worldwide Convention that Chris mentioned.
Our adjusted effective tax rate was 19.9% for the quarter. |
4,534 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Our adjusted effective tax rate was 19.9% for the quarter.
As we've talked about before, driving long-term growth requires making the right strategic and forward-looking investments. The resilience of our business and our overall financial strength put us in the ideal position to invest in critical areas that deliver against customer needs as well as unlock efficiencies for our people and our business. This includes new restaurant development as we look to accelerate the pace of openings and grow our footprint to 50,000 restaurants by the end of 2027. Development for the year is off to a strong start across markets, including in China, where we recently opened our 6,000th restaurant, and we are pacing on track against our global plan.
In addition to restaurant development, we're also investing for long-term growth in areas like digital and technology as well as our transformation efforts within our Global Business Services organization. By leveraging the full strength of our global scale, we'll build new and modern capabilities and ultimately unlock speed and innovation for our entire McDonald's system.
Despite the headwinds that persist, we remain well positioned with the unique strength and scale that only the McDonald's system can provide. As Chris talked about upfront, we are focused on how we can further leverage this across our consumer, restaurant and company platforms. With our system aligned on the right strategies moving forward, along with the financial strength of our franchisees, suppliers and the company, I remain confident that we will continue to deliver long-term growth for our system and for our shareholders.
And with that, let me turn it back over to Chris. |
4,535 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And with that, let me turn it back over to Chris.
Christopher Kempczinski: Thanks, Ian. We like to say that when culture calls, McDonald's answers. With a brand that is renowned throughout the world and marketing that is resonating in culture and with consumers, it's no wonder that we've been recognized yet again as one of the World's Most Effective Marketers by Work in association with Cannes Lion. We're elevating our creative excellence, scaling great ideas globally and building meaningful relationships with the next generation of consumers.
Breakthrough campaigns, a great-tasting menu and personalized experiences will drive customers to McDonald's again and again as they come through the physical doors of our restaurants and the digital door of our mobile app. And in this environment with pressured QSR traffic, we have an opportunity to get the customers who already visit to visit more often. As more customers make purchase decisions based on personalized recommendations on their phones, driving frequency means using our digital capabilities like loyalty to know and serve our customers better than anyone else. With the insights powered by our loyalty members, we will work to deliver the right message at the right time to the right consumer, encouraging those who already love McDonald's to visit even more. And when we shift marketing investment from traditional mass media like television, print and billboard ads to collective investment in modern and digital capabilities to personalize the experience, we drive profitability. |
4,536 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And successfully delivering personalized experiences depends on transforming our restaurants to deliver what customers want: hot fresh orders delivered with convenience and accuracy. The future restaurant experience is already underway in markets across the world, whether it's Ready on Arrival, a dedicated drive-thru lane for digital orders in China or other flexible format concepts. And by building the technology infrastructure to support the 3 long-term platforms we've discussed, we will create a more reliable experience and operate more efficiently.
We've talked about the ways best-in-class marketing and our iconic menu fuel the brand, but there is another component. Each and every day, our McDonald's system strives to fulfill our purpose of feeding and fostering communities locally. And there's no greater example of our decades-long dedication to driving positive impact than our work with Ronald McDonald House Charities.
This year, we're celebrating the 50th anniversary of Ronald McDonald House Charities, providing essential services that remove barriers to health care, strengthen families and promote healing when children need it most. Since that first house opening, the charity's global footprint has expanded significantly and they've helped tens of millions of families through the hardest of times. With more than 385 programs running across the world, the organization is providing support for families across 90% of the world's leading pediatric hospitals and extending care through more than 2 million overnight family stays each year. |
4,537 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Before I close, I'd also like to take a moment to recognize Rick Hernandez for his many contributions to the McDonald's system throughout his 28 years of service on our Board of Directors. And as I assume the additional role of Chairman following our Annual Shareholders Meeting next month, I look forward to working alongside our new Lead Independent Director, Miles White, and the rest of the entire Board to continue to deliver strong performance united under an aligned company voice.
I am confident that the system is focused on the right priorities with Accelerating the Arches as our playbook, evolving to meet the customer needs of tomorrow and laying the foundation for future growth.
With that, we'll take questions.
Operator: [Operator Instructions]
Mike Cieplak: Our first question is from David Tarantino with Baird.
David Tarantino: My question is on the comps outlook. I think, Ian, you mentioned on the last call that you had expected comps in the U.S. and IOM to settle to the 3% to 4% range this year. And now I think your commentary suggests you're operating in a tougher climate than when you gave that guidance.
So one, I wanted to ask if that range is still in play in both of those markets in your view? And then secondly, for the U.S. specifically, do you think a more concerted or more aggressive value approach is needed to get there in the current environment.
Ian Borden: Thanks for the question. Let me start and then I think Chris will probably jump in to kind of build out on whatever I say. But look, what I would start with is, as you know well, we don't typically give comp guidance. I think what we were trying to do as we looked back was to provide a directional perspective on what we felt the industry kind of historical range looked like in more typical years. As you know, we talked about '24 being a year where we felt top line was going to moderate. |
4,538 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I think -- four months into the year, I think what we can say is, clearly, 2024 isn't going to be a typical year for the broader industry. I say that because we're certainly seeing, as you heard in our upfront remarks, that the macro headwinds have been more significant than I think we even anticipated coming into the year and we continue to see those macro headwinds as we have started quarter 2.
And frankly, many of our large international markets and the U.S. -- and I think we expect in the U.S. that we're going to start the quarter roughly flat from a comp sales perspective from what we can see so far. And so I think what we're seeing is in many of our largest markets internationally and the U.S. that the industry traffic is either flat or we're certainly seeing declining trends. And I think as a result of that, we believe we're going to likely probably be below that historical range that we had indicated.
I think what's important is, clearly, we don't control the macro context around us. And so what we're focused on is always is listening to the needs of consumers, making sure we're making the appropriate adjustments in our business to deliver against those needs, and of course, is always ensuring that we can do it better than anyone else.
And I think affordability is clearly an area where consumer expectations are heightened. I mean, I think consumers are obviously dealing with a lot in the current macro context. Obviously, they're getting hit, I think, across their full basket of goods and services by all the inflationary impacts. |
4,539 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I think, importantly, we've got a really long and strong history of being a leader in both value for money and affordability. We've obviously been through these difficult context many times over time. I say that because I think it's important that we know what we need to do. I think we know how to do it well, and the financial strength of our business puts us in a position to be able to do that better than anyone else. And I think that's what we're going to make sure we're delivering against that, and each of our large markets is positioned for success against those current consumer expectations.
Christopher Kempczinski: And then turning to value in the U.S., I think it's important to first recognize that there is some great value that our system, our franchisees are offering in the U.S. 90% of our system in the U.S. is offering meal bundles for $4 or less. And if you look at digital value, we've got some great digital offers out there. I just opened my app while I was waiting to jump on this answer and we're offering right now a Big Mac for $0.29 when you buy a Big Mac or you could get 30% off McCrispy. So there's a lot of great value out there.
But I think the issue that we have in the U.S. is in an environment where everybody is out there with a value message, there's an opportunity for us to drive better awareness of what our value platform is. And one of the things that's going on in the U.S. right now is the value message that I was talking about, we're doing it in 50 different ways with local value. And what we don't have in the U.S. right now is a national value platform at the same time that our competitors are out there with a national value platform. |
4,540 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | So the opportunity for us in the U.S., I think, is to get more aligned to the system around a strong national value proposition that we can then use our media scale to drive high consumer awareness on it. So that's what I know Joe and the team are focused on the U.S. And as I look at the U.S. compared to other markets where we're having success, you've got to be able to have high awareness and that's, I think, the big opportunity for us going forward in the U.S. business.
Mike Cieplak: Our next question is from Brian Harbour with Morgan Stanley.
Brian Harbour: Yes. I guess, given kind of the response to that prior question, what's some of the timing on that value plan, especially in the U.S.? Do you think that we'll start to see some improvement in the second quarter? Do you think it sort of takes longer than that? What else could we think about from a sales driving perspective or maybe a product perspective that will be noticeable U.S. comp drivers as we think about this year?
Christopher Kempczinski: Sure. Well, I think what we've seen, if I turn to France, as an example, France, I was talking about last quarter as having a number of areas of opportunity and in my prepared remarks, I noted that, that system in France came together very quickly around a national value program that they then put significant marketing support against and they got to north of 80% awareness in a very short period of time that's starting to drive encouraging trends in their business results. |
4,541 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I think what that highlights is it's not about how quickly can you see the business impact when you have a strong marketing support against a compelling value platform, it's how quickly can your system move and pivot to getting that in place. And I know that, that's something that Joe and the U.S. team are talking with U.S. franchisees on. I think, again, there's lots of great value that we have out there at a local level, but it's how do we come together in the U.S. around a stronger national value platform that can compete. How long that takes, I think, is going to be up to individual conversations that happen in the market. But it's clear that once you have that in place, the business could start to respond pretty quickly.
Ian Borden: And maybe just the only build I'd add to what Chris said, Brian, is, I mean, I think I know, as Chris said, our U.S. leadership team is really -- is working really closely with our owner/operators. I think we have a good understanding of what we need to do, kind of how to do that well. And we're going to move, obviously, as quickly as we can together with owner/operators to kind of address that opportunity. And we've seen that work really well in other markets globally, as Chris was talking about.
Mike Cieplak: Our next question is from Dennis Geiger with UBS.
Dennis Geiger: Wondering if you could speak a little bit more to kind of what you're seeing with that U.S. consumer, whether it's by income cohort or spending pattern.
And then sort of beyond the affordability and aligning the system on a national value plan, can you speak at all to sort of some of the other key levers that maybe can be supportive of U.S. sales growth in the current environment?
Christopher Kempczinski: Sure. Well, I think one of the things that we noted when in our opening is that the consumer is certainly being very discriminating in how they spend their dollar. And the inflation that has occurred over the last couple of years in the U.S., I think, has certainly created that environment. |
4,542 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And while it may feel it may be more pronounced with the lower-income consumer, I think it's important to recognize that all income cohorts are seeking value. And so our focus is on making sure, as I said, that we're offering strong value to our customers. And that's going to have benefits not just to low income, that will have benefits to middle and upper income as well. And so the actions that you take are the same regardless of the income cohort that you're talking about.
From other sales driver standpoint, on that score, I feel really good about where we're at in the U.S. As I look at, most importantly, how we're running our restaurants, our franchisees in partnership with our U.S. team are doing a really nice job of running strong restaurant operations. We're seeing improvements in speed of service. We're seeing the turnover in our restaurants is down.
All of those things in combination are improving customer satisfaction. We're seeing our satisfaction scores increase in the U.S. And then we will, of course, have menu innovation that happens throughout the year. It's part of what we do. I'm not going to get into detailing exactly what the menu innovation is going to be and when it comes, but certainly you can expect that we will use menu innovation as well to find ways to engage our customers.
And lastly, I would just point out, we always have to be finding ways to be driving consumer interest around great marketing plans. And if we're doing great marketing, you can grow the business just with your core menu. And so I know the U.S. team, along with our agency in the U.S., Wieden+Kennedy, they're continuing to look for what's the next big idea that we have from a marketing standpoint to drive the business. So multiple levers at our disposal. |
4,543 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: And Dennis, maybe I'll just build on what Chris was saying because I think it's such an important point. I mean our -- the foundation of our business, the vast majority of our business is in an incredibly strong position. I mean, I think we come into this more challenged macro environment kind of in an advantaged position. And I think the emphasis with that would be we have a fully modernized estate, as Chris kind of referred to. We've got, I think, a marketing and brand engine that's best-in-class meaning I think the team continues to deliver great creative execution. I think that's resonating with customers in culturally relevant ways. We've got our system financial strength that's at one of its strongest points in our history. So we've got the ability to kind of lean into opportunities together because of all the work we've done over the last couple of years.
And then if you think of our 3Ds of delivery, drive-thru and digital, we have a leadership position in each of those areas. We're continuing to invest to drive growth in those areas. Delivery, for example, the U.S. business kind of hit all-time highs in the first quarter. Delivery is -- sorry, digital, as you know, we've made a lot of progress in. And we know we continue to drive growth in digital more broadly.
So I think we feel really good about the vast majority of our business. We just know the consumer is looking for more on affordability and value, and we're going to lean in and make sure we can meet those needs.
Mike Cieplak: Our next question is from John Ivankoe with JPMorgan. |
4,544 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from John Ivankoe with JPMorgan.
John Ivankoe: I was wondering what kind of opportunity or maybe need that we have to address core menu pricing in the U.S.? And I speak specifically about things like Quarter Pounder combo pricing or Big Mac combo pricing that can actually be very different across the restaurant base even within a given market. And obviously, the press will communicate some of the highest pricing in certain stores as you talk about what the direction of pricing has happened to McDonald's across the country even if it is just certain stores.
So is there a need or an opportunity to kind of get back and communicate around core menu pricing to kind of give the perception of value for consumers that maybe even or outside of the value menus of what we did pre-COVID?
Christopher Kempczinski: Sure. Well, let me start with -- I think it's important to recognize that if you look at margins in the U.S. today, restaurant-level margins for franchisees versus where we were in 2019, we've just now rebuilt franchise restaurant-level margins back to where we were in 2019. So the pricing that's been taken over the last several years was all taken as a means to offset what we were seeing around quite high labor inflation and quite high commodity -- food and paper inflation.
So restaurant margins are now back to where we are -- where we were again in 2019 in the U.S., which then says to me that we do have the ability to be thinking about what we do from a value proposition going forward, and I talked about that in my answer to the earlier question. |
4,545 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I think the idea of where do we need to stay from a pricing standpoint on core menu, we've done a lot over the last several years building our pricing capabilities and the pricing capabilities that we have happen at the local level. So we will go and we will take a look at what are the competitive products around us, what are they priced at and how do our products match up against that. And all of that is then used to inform at the franchisee level, at the restaurant level what our relative pricing is.
So I think from where we are, I feel like we are in a decent shape from an overall menu standpoint. Yes, there will be the one-offs that gets sensationalized and reported on. But again, our opportunity is we need to speak in a more compelling way with one voice about what are those entry point, affordable price points that will be attractive to consumers and that's what the focus for our U.S. team, I know is.
Ian Borden: Maybe John, I'll just build a little bit on what Chris talked to because I think -- maybe the way to think about it is what do we think good looks like in getting value and affordability right. And I would -- I think we would say it's a couple of things. It's making sure, as Chris said, we've got those entry-level items at affordable price points for people -- or for consumers. It's making sure that we've got an entry-level meal bundle that's at an affordable -- compelling affordable price point and doing that generally with products that consumers know and that we've got strong equity behind. And then I think if breakfast is a big part of our business like it certainly is in the U.S., making sure we've got compelling value at breakfast as well. |
4,546 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And I think, obviously, from an executional standpoint, we've got to make sure we've got the right products at the right price, and we've got, as you've heard Chris talk about, that consumer awareness at a level of significance so that consumers are aware of the offers and the affordability price points and that's going to influence their visits as we look forward and they're looking across different options.
So again, I think we're working hard to make sure we're delivering against each of those opportunities. And as Chris talked about, in markets where we've done that well, we're seeing really strong performance and that's the opportunity we're focused on making sure we have in place in each of our top markets.
Mike Cieplak: Our next question is from David Palmer with Evercore.
David Palmer: You noted that customer satisfaction scores had been heading higher. And that definitely doesn't surprise me given all the improvements to the restaurants and digital and the core food renovations. But it does -- I guess what does surprise me is that the gap to the industry, at least in the U.S., has eroded that out-performance gap. I wonder whether it's the surveys or certain consumer trends as you slice it thin, even dayparts.
What are the insights about why that gap has narrowed because it has been surprising. Is it just an entry price point opportunity in the value scores that you're seeing with certain income cohorts? And how does the opportunity for the U.S. differ from maybe some of your other international Big 5 markets?
Christopher Kempczinski: Sure. I think on our overall satisfaction, again, we look and we're seeing improvement across all of our major markets on satisfaction, and as you noted, there's multiple aspects to that. |
4,547 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I think where we see the one opportunity as you sort of then decompose drivers of satisfaction, certainly, in some markets we have seen that our relative superiority on affordability has declined. And I think if there's any pressure on overall satisfaction or if there's anything that's closing it, it's probably losing some of that relative superiority on affordability. Again, that's not in all markets, but that's in a few markets.
It's important to still note we still are viewed as a superior value proposition, but the degree of gap in a few markets has narrowed. And so that leads back to all the things that we've been talking about on this call as things that we need to be focused on.
Ian Borden: David, just maybe to build because I think experience, as you noted, is encompassing of a number of different factors. I mean, I think we're driving better speed of execution consistently across our top markets. We know when we put capabilities in place, as you've heard us talk about previously like Ready on Arrival, which is in place in the U.S. that we're delivering hotter, fresher food as customers arrive to our restaurants and delivering an overall better experience. I think the sharp point and Chris mentioned this is just we've got that opportunity on affordability and we're really laser-focused on making sure we can meet the need that consumers are expressing in the current context. But we feel really good about all the other aspects of the experience and how we're delivering against what customers are expecting.
Mike Cieplak: Our next question is from Eric Gonzalez with KeyBanc.
Eric Gonzalez: On the pricing discussion, and I appreciate the point that your store-level margins are back to 2019 levels, but perhaps you could speak to the current level of year-over-year pricing and your current inflation expectations for food and labor this year?
And then just maybe whether you've seen any changes in the flow-through of that pricing or any elasticity changes. |
4,548 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And then just maybe whether you've seen any changes in the flow-through of that pricing or any elasticity changes.
Christopher Kempczinski: Sure. Well, my guess is your question is focused on the U.S. because obviously I could give a different answer depending on where you are in the world. But if I focus just on the U.S., most of the pricing that you see now in the U.S. is carryover pricing. It's not new pricing per se. Most of it again is carryover pricing.
That said, we do continue to see there's certainly labor inflation. Much of that is coming out of what happened in California. And on a national level, you could probably see we're expecting high single-digit labor inflation. Again, much of that from the bleed over of what California introduced.
And then on food and paper inflation, I think that's gone down to much more historical levels. So we're back at more historical levels on what we see from a food and paper inflation going forward.
Ian Borden: Maybe just to build, Eric, to what Chris said, I mean, the food and paper low single digits. So I think we have seen kind of favorable movement in this year, although we've still got a fair bit of carryover effect from '23 inflation, certainly into the first part of '24 from both food and paper and labor.
I think what's important to note on pricing is, I think, our business, including our owner/operators, understand that the consumer is price-weary. And I think we certainly are going to be prudent and thoughtful about any further price increases that we're looking at for the rest of 2024 on that backdrop and keep working on the opportunity that we've talked about a fair bit already on the affordability and getting that in place to kind of address the consumer need.
Mike Cieplak: Our next question is from Sara Senatore with Bank of America. |
4,549 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Sara Senatore with Bank of America.
Sara Senatore: I guess one clarification and then a question. You mentioned that the QSR industry traffic is flat to declining. I guess, I always think of this as an industry where traffic is kind of, at best, flat. So I'm just trying to understand, given you usually have better data than I do, whether that's an inflection point? Or this -- the sort of traffic trends have been more consistent, which it sort of sounds like?
And then the question I have is you mentioned margins are right back to where they are. I think franchisee cash flow is also back to pre-COVID, not COVID peaks. But I guess as you think about maybe investing in value, do you contemplate you doing anything to support franchisees. I don't know if it's sort of fee abatements like digital fees or we've seen some other restaurants kind of pull back on those when franchisees are making investments, whether they be capital investments or in other operating expenses. So just is supporting franchisees something that you can do if you really need to reinvest in value?
Ian Borden: It's Ian. Let me take the clarification and then I'll let Chris address your question. So what I said earlier was that industry traffic, and I was talking about across many of our top markets, is flat or we're seeing declining trends.
If I talk specifically about the U.S. in quarter 1, industry comparable traffic was negative and we expect it to be negative for the full year. And I think that's the context that's important, just to give the context to the more challenging macro environment. |
4,550 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Christopher Kempczinski: Yes. And then turning to franchisee and your question about how we support franchisees, you're right that our U.S. franchisees, and I could go through other markets as well, but they're in a strong position. When you look at franchisee cash flow, we are at, I think, our second highest level ever, 2021 being the peak, but we're at very strong franchising cash flows. We're going to see franchisee cash flows increase in Q1.
And if you think about the balance sheet for our franchisees, the modernization that we did on our restaurants in the U.S. many years ago now was all done in a period of super low interest rates. And so any debt that's being carried on the books for our franchisees is at significantly lower interest rates than what we're seeing in the market right now. And so our franchisees are in a strong position.
As you know, they control pricing. We don't step in and subsidize pricing. But I think the opportunity here is what I mentioned earlier, we have a lot of great value out there in the market. We're just doing it in a very fragmented way. And so the opportunity for us is how do you maybe pull back a little bit on all the local value that we're offering, which, frankly, we don't have very high awareness on and how do you coalesce and drive awareness around a national value proposition.
So I think there's a smart way to do this that can end up being net neutral to a franchisee P&L. But just using the size and scale of our marketing engine and the amount of media that we spend, I think that's going to be the opportunity for us going forward. And certainly, we're in a good position from a system financial health standpoint to go do that.
Mike Cieplak: Our next question is from Lauren Silberman with Deutsche Bank. |
4,551 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Lauren Silberman with Deutsche Bank.
Lauren Silberman: I had a follow-up on the value question. You mentioned you're offering value 50 different ways. Can you just talk about what a future national value platform could look like given how different the cost environment looks like across the U.S.? I imagine price point value could be difficult.
And then when you look at what type of value consumers are most looking for, is it price point, lower entry points, bundled deals? Are you seeing an uptick in the value mix?
Christopher Kempczinski: Yes. I'll maybe start and then I'll hand off to Ian. But I think Ian outlined in general a construct that we see as sort of being our successful playbook, which is you need to have good entry level price points. You need to have a meal deal. And then there needs to be something that if you have a big breakfast business, you need to be offering value that's specific to breakfast.
And in a number of markets around the world, we're doing that very successfully. Certainly, in the U.S., we see that there is different cost environment. But then, again, our competitors have those same differences between high-cost markets, low-cost markets, et cetera. And so -- and that exists in other markets as well. If you were to go to France, it's much different if you were to go to Paris than what it would be somewhere outside of Paris.
So those differences exist in many markets around the world. I think what our system has historically shown an ability to do is working with our franchisees, how do you think about it from a portfolio standpoint. And ultimately, in this business, if you're driving transactions, if you're driving guest counts, that ends up being a good thing for everybody. |
4,552 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | So we have a history of being able to do this. We've done this as I mentioned in our opening. We've been doing this for 70 some-odd years. So I think we understand what it takes, but it happens through a conversation with our franchisees to get aligned around what that national value proposition looks like.
Mike Cieplak: Our next question is from Brian Bittner with Oppenheimer.
Brian Bittner: As it relates to the operating margin guidance, mid- to high 40s range is still a very wide range, Ian, and I fully understand there's a lot of moving pieces in the financial model. But I'm curious, with a quarter in the books, if there's an opportunity to perhaps tighten the expectations around that range? As we look towards last year's 47%, is that kind of a good base case target for operating margins this year? Or should we anticipate declines similar to like what we saw in the first quarter?
Ian Borden: Brian, thanks for the question. Look, I mean, you hit on it. It's obviously in the context we're working through in '24. There are a lot of variables at play. And I think the macro context means it's difficult for us to kind of predict the forward look in terms of what's the duration of the macro headwinds we're seeing and the depth. So I think that obviously is impacting performance. And as always, our op margin leverage is going to be dependent on our strength and level of sales growth.
Look, I think I remain really confident in our ability to drive leverage in op margin over time as we're able to kind of continue to drive strong top line growth. And I think we're confident, as we work to kind of address the affordability opportunities we've got, that's going to be helpful in getting sales growth back to the direction we want. And over time, that will certainly be helpful in continuing to drive leverage and op margin.
Mike Cieplak: Our next question is from Andrew Charles with Cowen. |
4,553 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Andrew Charles with Cowen.
Andrew Charles: Chris, looking to learn more about how this national value platform will be different from years past. So if I think, historically, back in 2018, for instance, the $1 $2 $3 was launched. It looked like it was a negative traffic year for the U.S. business just in that regional approach to value had been more successful the brand despite what you said about competitors that are pursuing more national value. So I'm curious what you think is going to make this time different that will lead national value to be more successful, if you can put about the constructs of what that will look like going forward.
Christopher Kempczinski: Sure. Well, state the obvious. It's up to the U.S. team in partnership with our owner/operators to define what is a national value proposition look like in the U.S. As you know, with $1 $2 $3, it took a minute for that program to gain traction, but it then drove very strong results. I think, certainly, if you look at the U.S. performance over the last many years under the $1 $2 $3, I think we're now -- we were in year 6 or 7 of the $1 $2 $3, that was a very successful platform for us in driving performance across the U.S. business.
The point about how quickly does it actually impact transactions and turn that around, it goes back to how quickly you can drive awareness with the consumer on that. And the faster that you can drive awareness, the faster you can start to see that driving incrementality on the business.
So I think, first, it's getting the platform defined, making sure that it's compelling with customers. And then making sure that you support it properly to drive the awareness that you need to ultimately impact transactions on the business.
Mike Cieplak: Our next question is from Greg Francfort with Guggenheim. |
4,554 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Mike Cieplak: Our next question is from Greg Francfort with Guggenheim.
Gregory Francfort: My question is just on the International business. And I'm curious what you're seeing, I don't know if it's maybe from a protest standpoint or if the business has continued to weaken there into the second quarter in the same way that it's done in the U.S. business and what you might be doing from a support perspective through the ideal royalty rate or anything like that?
Christopher Kempczinski: Sure. I think if you look at the impact of some of the boycotts in a few of our markets, I wouldn't say things are getting any worse there. And then, I think, in some cases you might be able to look and say perhaps it's getting slightly better in some places.
So no big change on that. I think it's also just worth -- it's interesting to note that in many of those markets, our delivery business is holding up quite well, which is kind of an interesting dynamic there.
So maybe marginally better in some markets. But as I referenced on an earlier call, we're not expecting to see any meaningful improvement in the impacts on that until the war is over, and we continue to have that outlook on what the Middle East conflict is going to do to our trends. Ian, I'll pass it over to you.
Ian Borden: Yes. Maybe just one kind of build on the headwinds. I mean, I think what I said upfront, that the macro headwinds that we were seeing were more significant across a number of our large international markets and that's continued into the start of quarter 2.
I think on support for kind of the IDL, look, I mean, you've heard me talk about this before. I mean, I think when there are external factors that are kind of beyond the control of our franchisees that are impacting the business and those franchisees are doing everything right and continue to do everything right for the McDonald's business, providing support in situations that warrant it, is kind of part of what I'll call our fundamental business model. |
4,555 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | I mean if and when we make decisions to provide support, it's always targeted and temporary. It's always designed to go to our franchisees who are most in need. I think we've talked previously that we have provided some support for some markets that have been impacted in the region. Obviously, we're continuing to look at the facts and circumstances and continue to work incredibly closely with our DL partners.
I would just say that the level of support that's been provided so far has not gotten to what I'll call a significant level. But obviously, we're continuing to stay close and work very close with our DL partners in the region.
Mike Cieplak: Our next question is from Brian Mullan with Piper Sandler.
Brian Mullan: Just a question on CosMc's. I wonder if you could just talk about what some of the early learnings are in your tests in both Illinois and Texas.
And then related to that, can you just talk about how you might plan to approach it from here in terms of how you evaluate the stores, what that decision process looks like if you ever wanted to ultimately build more of them next year or beyond. Any color would be great.
Christopher Kempczinski: Sure, Well I'm going to disappoint you, Brian, in telling that there's not a lot to report. I think what we're still seeing is there's a lot of interest in CosMc's that's sort of curiosity driven. And as a result of that, it's tough to get a sense of sort of what are the true kind of underlying performance expectations. |
4,556 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | As we've referenced in our Investor Day, what we're looking at for the ultimate success on this business is we've got to have a business that's driving comparable or stronger ROIC to a traditional McDonald's. There'd be no reason to be putting any capital against CosMc's unless it was neutral to accretive to building a traditional McDonald's. That's going to then be a function of what we see around both the absolute unit volumes in that concept, the margins associated with that and our ability to build these smaller-footprint restaurants at a lower cost than what we're expecting.
So all of those things are things that we're going to be assessing in our test market. As I've referenced previously, we have 10 -- we plan on opening 10 restaurants. And it will be a function of unit volumes. It will be a function of margins and it will be a function of what the capital that we need to spend to get these things built. All of that will drive our overall assessment of what the ROIC potential is.
Mike Cieplak: We have time for one more question from Jeff Bernstein with Barclays.
Jeffrey Bernstein: Great. Just following up on the U.S. comps. I know you guys have mentioned the lower-income households and the weakness seen there and maybe some trading into food at home. Just wondering if you can maybe compare that to past slowdowns. I feel like the message has always been the benefit of the quick-service segment. Maybe you lose some on the low end, but importantly, you inherit some who trade down from above, like you said, if everyone is looking for value.
And when that is a context, I think you mentioned that the system franchisees like the buy-in is there for the incremental value push. I just want to make sure I heard that right, whether there's any sentiment from the biennial in terms of franchisee sentiment, especially with the most recent fundamental easing. |
4,557 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | Christopher Kempczinski: Sure. Well, so I think it's tough to go back and compare the data today versus our last time that there was an economic slowdown. I think the dynamic that you described is what we do typically see in the business. I think, as you also know, Jeff, that our business over-indexes with lower income consumer. So there's that consideration.
But I would just go back to we recognize that we're in an environment where the consumer is being price discriminating. And again, that's not just something that's low income. I think all consumers are looking for good value for good affordability. And so we're focused on that action.
In terms of franchisee buy-in, that's a process that we work through in every single market to get alignment with our franchisees on what a national value program would look like, or if it's about launching a new menu item, what that timing of that would look like. So that's work that the U.S. team is doing. In a system that has 2,000 franchisees in the U.S., I think it's -- there are going to be different people in different places on that. And that getting to alignment ultimately comes through conversation.
And we -- like I said, we've been doing this for 70 years. We know how to get it done. But it just -- it comes through a lot of conversations with U.S. franchisees as it would in any other market.
Ian Borden: Jeff, maybe just 2 quick hooks to what Chris said. I think across markets, I think what our leadership teams are spending time on talking to the business, talking to our franchisees about is what I'll call making sure we've got a street-fighting mentality in the current context. I mean, clearly, the macro is more difficult. Clearly, everybody is fighting for fewer consumers or consumers that are certainly visiting less frequently. And we've got to make sure we've got that street-fighting mentality to win irregardless of the context around us. |
4,558 | MCD | 1 | 2,024 | 2024-04-30 08:30:00 | McDonald's Corporation | 139,488 | And as I think we've talked a lot today about our position -- our system is positioned with the strength and capability. There's no reason why we shouldn't have the most compelling value and affordability positioning from the focus of a consumer.
Ultimately, we're going to measure our progress through are we taking share. And I think we are, Chris and I and certainly the leadership teams, are laser-focused on that and that's the opportunity ahead, and we're very focused on that.
Mike Cieplak: Okay. That concludes our call today. Thank you, Chris. Thanks, Ian. Thank you, everyone, for joining. Have a great day.
Operator: This concludes McDonald's Corporation Investor Conference Call. You may now disconnect. |
4,559 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Operator: Hello, and welcome to McDonald's First Quarter 2025 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. Following today's presentation, there will be a question-and-answer session for investors. [Operator Instructions] I would now like to turn the conference over to Mr. Dexter Congbalay, Vice President of Investor Relations for McDonald's Corporation. Mr. Congbalay, you may begin.
Dexter Congbalay: Good morning, everyone, and thank you for joining us. With me on the call today are Chairman and Chief Executive Officer, Chris Kempczinski; and Chief Financial Officer, Ian Borden. As a reminder, the forward-looking statements in our earnings release and 8-K filing also apply to our comments on the call today. Both of those documents are available on our website, as are reconciliations of any non-GAAP financial measures mentioned on today's call, along with their corresponding GAAP measures. Following prepared remarks this morning, we will take your questions. Please limit yourself to one question and then reenter the queue for any additional questions. Today's conference call is being webcast, and is also being recorded for replay via our website. And now, I'll turn it over to Chris. |
4,560 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Thanks, Dexter, and good morning, everyone. We entered 2025 knowing that it would be a challenging time for the QSR industry, due to macroeconomic uncertainty and pressures weighing on the consumer. During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected. We believe McDonald's can weather these difficult conditions better than most, as we have proven time and time again, and expect to outperform our competitors by harnessing the strength of our brand and the power of our global scale. However, we're not immune to the volatility in the industry or the pressures that our consumers are facing. Our global comp sales in the first quarter declined by 1%, and while we expected global QSR industry traffic would be down in the first quarter, actual industry traffic fell more than we anticipated in several of our large markets, including the U.S. In the U.S., overall QSR industry traffic from the low income consumer cohort was down nearly double-digits versus the prior year quarter. Unlike a few months ago, QSR traffic from middle income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened. However, traffic growth from the high income cohort remains solid, illustrating the divided U.S. economy, where low and middle income consumers in particular are being weighed down by the cumulative impact of inflation, and heightened anxiety about the economic outlook. We know that leadership in value and affordability is paramount in an environment like this, and we have been expanding and refining our value proposition to meet the needs of our consumers, especially our low and middle income cohorts, as well as families internationally. Building upon the actions we began to take in 2024, we now have every day affordable price menus, or EDAP, and entry level meal bundles in each of our big five international operated markets. As we've said before, these are the building blocks of what good |
4,561 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | in each of our big five international operated markets. As we've said before, these are the building blocks of what good value means to us, pairing an EDAP menu with items priced at compelling entry level price points with strong meal bundles. In early January in the U.S., we launched our McValue platform, which is a new branded equity similar to the Saver Menu in the UK and the Loose Change Menu in Australia, both of which have been in place for over 10 years. In this environment, we remain focused on the factors within our control, including delivering outstanding operational execution. We believe the scaled combination of our value platforms, the introduction of innovative new products, and the execution of world class promotional and marketing campaigns provide a compelling offering for our customers, not just bringing them in the door, but offering them the feel good moments they've come to count on from our brand. For example, just a few weeks ago, we launched a marketing campaign in partnership with A Minecraft Movie, our largest global campaign yet with participation by more than 100 markets. As part of this campaign, we've combined exclusive digital in-app and gaming experiences with in-store collectibles for fans young and old through Happy Meals and the core menu inspired Minecraft Movie Meal. We're encouraged by the consumer response to the Minecraft Movie campaign, and by our overall performance in April, which illustrates the benefit of our value platforms working in conjunction with full margin promotions and outstanding marketing execution. We continue to expect our guest count and market share performance will improve from the first quarter low point, driven by our emphasis on strong value and affordability execution that we have been addressing. The introduction of exciting new menu items, such as the nationwide launch of McCrispy Chicken Strips in the U.S. should contribute to this growth. However, we remain cautious about the overall health of the consumer. Before I hand it over to Ian to |
4,562 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | to this growth. However, we remain cautious about the overall health of the consumer. Before I hand it over to Ian to discuss segment performance, I also wanted to touch on the creation of McDonald's global Restaurant Experience Team. It's significant for two reasons. First, through the new integrated structure, we'll be able to execute faster, which means ideas can start showing up in our restaurants even sooner. We can achieve and scale cross functional product innovations like Best Burger, Big Arch and McCrispy faster than ever before with menu, supply chain, operations, and Speedee Lab teams all in one place. It also increases our ability to develop and scale tech innovation in new ways, such as Ready On Arrival, Internet of Things enabled restaurant equipment, and Google Cloud connectivity through the eyes of a restaurant general manager to ensure they're all working in coordination with each other. Second, the category structure with dedicated leaders for beef, chicken, and beverages gives us better accountability and a sharper line-of-sight into what it takes to win in each of these verticals. Increasingly, we're competing against specialists, and so we're bringing a specialist focused into McDonald's. In beverages, for example, we've discovered some interesting learnings through our CosMc's test, which has better informed our understanding of consumers' customization preferences and interests in new emerging beverage categories. Later this year, in partnership with our franchisees, we'll be launching a beverage test in the U.S. in some of our existing McDonald's restaurants that will incorporate new menu items inspired by CosMc's. We'll share more details on this in the coming months, as we continue to test, learn, and position ourselves for growth in this space. As Jill McDonald steps up to lead the Restaurant Experience Team, we welcome Manu Steijaert with his rich market perspective and lifelong understanding of customers' needs to the role of President of our International Operated Markets segment. |
4,563 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | and lifelong understanding of customers' needs to the role of President of our International Operated Markets segment. Jo Sempels, previously President of the International Developmental Licensed Markets will now assume responsibility for McDonald's France, which is one of our largest and most important markets globally. And Dario Baroni, who previously oversaw our mid-sized IOM markets will backfill Jo as our IDL President. I'm immensely proud to see these proven leaders taking on new opportunities in some of our most important roles, demonstrating the depth of talent we possess within our organization. I'll now turn it over to Ian. |
4,564 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Thanks, Chris, and good morning, everyone. Overall, our first quarter financial results reflect the increasingly challenging industry and consumer pressures that Chris mentioned upfront. Against this backdrop, combined with severe weather conditions, primarily in North America and the impact of the Leap Day last year, our first quarter global comp sales declined 1%. Global comp sales were essentially flat when the Leap Day impact is excluded. In the U.S., comp sales declined 3.6%, largely reflecting broad based consumer challenges, particularly amongst the lower and middle income cohorts. However, while comparable guest counts also declined versus the prior year, we delivered a positive comp guest count gap to most near end competitors supported by the launch of our McValue platform, which incorporated the $5 Meal Deal offering; the Buy One, Add One for $1 component; and our in-app exclusive digital offers. As with our value platforms in other markets, we'll remain agile to ensure McValue continues to meet consumer needs and positions us for success in a challenging marketplace. While we may adjust our current McValue offerings over time, for the remainder of 2025, we'll continue to include everyday value meal deals starting at $5, given how the current $5 Meal Deal in particular has resonated with customers. In quarter one, we also launched a national marketing campaign celebrating 50 years of breakfast at McDonald's with a national Egg McMuffin Day and expanding the availability of bagel sandwiches nationwide to strengthen our position and drive traffic in this important daypart. In addition to delivering exciting menu innovation and world class marketing efforts, we remain committed to driving operational excellence and running great restaurants. One key measure for how we are performing is the customers' experience when visiting McDonald's. In the first quarter, we raised our customer satisfaction scores to an all-time high in the U.S. And now, turning to our International business. In most of |
4,565 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | our customer satisfaction scores to an all-time high in the U.S. And now, turning to our International business. In most of our major markets, we're seeing a similar story in regards to the challenging industry environment and softening consumer sentiment. In our International Operated Markets segment, comp sales declined 1% versus the prior year quarter. Results were mixed across the individual markets, including negative comps in the UK. QSR industry traffic growth was positive in only two of our big five markets. However, we drove a positive comp guest count gap to most near end competitors across the majority of our largest markets, demonstrating the strength of our value platforms and how they're resonating with consumers. In addition, as in the U.S., we have also raised our customer satisfaction scores to all-time highs in nearly all of the international operated markets, including the big five. In France, we continued to realize the benefits of our turnaround efforts despite a challenging industry environment. For the first-time in nearly three years, we delivered positive market share gains in the quarter, driven by the success of our value offerings, including a EUR4 Happy Meal and a Value Meal partnership with League One. At the end of March, we also launched a new EDAP menu featuring a variety of items with price points of under EUR3. We're complementing these value offerings with strong menu news, such as the recent launch of the Big Arch with positive results, marking another step in the continued expansion of this large satiating burger. In Germany, QSR industry traffic continued to contract in the first quarter, but we drove a positive comp guest count gap to near end competitors and increased market share behind a new comprehensive value offering, McSmart Snacks, which is an EDAP platform. We now have all aspects of good value and affordability effectively integrated in the market and working in conjunction with meal bundles, which will be complemented with exciting menu and marketing news |
4,566 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | in the market and working in conjunction with meal bundles, which will be complemented with exciting menu and marketing news through the year. In Canada, where QSR industry traffic increased in the first quarter, we delivered both positive comparable sales and guest count performance, driven in part by our $1 coffee offering and our Hockey Showdown limited time promotion. As a Canadian, I can tell you that Canadians are extremely enthusiastic hockey fans. This passion was evident in the results with the Hockey Showdown promotion being one of the top performing earned media brand affinity campaigns with over 50 million impressions and driving a lift to the overall sandwich category. And in the UK, where QSR industry traffic declined versus the prior year quarter, we are actively addressing the opportunities that are within our control. We understand what it takes to succeed in the UK market, which continues to build upon their value and affordability foundation, and we remain confident in our ability to revitalize the business by improving our execution and leveraging successful strategies from other markets. And lastly, to round out the big five, in Australia, we are making progress despite declining QSR industry traffic. With a new Managing Director in place, we look forward to seeing our momentum built. Finally, in our International Developmental Licensed Markets, comp sales for the quarter were up 3.5%, largely driven by positive results in the Middle East and Japan. And in China, our performance remained stable, driven by an increase in delivery share, the success of the Big Bites, Value Meal and strong performance in chicken. Turning to the P&L. Adjusted earnings per share were $2.67 for the quarter, which includes a $0.04 headwind from foreign currency translation. Adjusted earnings per share increased by 1% compared to the prior year in constant currencies. Despite the challenging market conditions, top line results generated over $3.3 billion of restaurant margins for the quarter, and adjusted operating |
4,567 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | market conditions, top line results generated over $3.3 billion of restaurant margins for the quarter, and adjusted operating margin was about 45.5%, highlighting the durability of our business model. Results for the quarter included lower company operated margins, reflecting pressured top line results and commodity inflation, particularly in Europe. This was partially offset by lower G&A spend, which was primarily driven by the timing of investment and the comparison to prior year costs related to our biannual worldwide convention. We remain focused on optimizing our run the business spend as we continue to invest in our strategic growth priorities, such as digital and technology, and our transformation efforts led by our global business services organization that will drive long term efficiency. With respect to the remainder of the year, while we remain cautious about consumer sentiment, we are reaffirming our full year 2025 financial targets that we outlined in February, which include the impact from tariffs that are currently in place. We expect foreign currency translation to be a tailwind to 2025 earnings per share of about $0.05 per share based on current exchange rates, that's a significant change versus our previous estimated headwind of $0.20 to $0.30 per share, reflecting the recent weakening of the U.S. dollar versus major currencies. As always, this is directional guidance only as rates will likely change as the year progresses. Despite the ongoing industry headwinds, we know that McDonald's is well-positioned to succeed due to the resiliency of our business and our overall financial strength. And we remain confident in our ability to deliver long term profitable growth for the system and to create value for our shareholders. And with that, let me turn it back over to Chris. |
4,568 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Thanks, Ian. A couple of weeks ago, McDonald's top leaders from around the world gathered in Hyderabad, India to discuss the path forward on our strategic priorities. We're clear on the enablers of our Accelerating the Arches growth strategy and specifically our commitments to sustaining leadership on value and affordability, capitalizing on our new category teams to strengthen customers', taste perceptions of our food and accelerate menu innovation, ensuring restaurants deliver feel good experiences where customers keep coming back and employees are excited to work, and continuing to lead with our values as the foundation of how we do business. After meetings like this, I'm always impressed by the strength and resilience of McDonald's three legged stool. It was yet another reminder of the ways our dedicated franchisees, hardworking crew and arguably the best global supply chain in the world come together to make sure the golden arches shine brightest for our customers even during challenging times. It's a defining feature of our system. Our commitment to serving local communities is not just our mission, it's the essence of our franchisee model. We're a global brand, but an incredibly local business. Thousands of franchisees running our restaurants have a deep connection to the communities they serve and a keen sense of how we can bring the most positive impact and add the most value. In most communities, if not markets where we operate, McDonald's and its franchisees is one of the largest employers. When it comes to providing quality ingredients, we prioritize sourcing from local farmers and suppliers to serve the food our customers love most. While we anticipate that the economic environment will remain challenging in the near term, I'm confident that our Accelerating the Arches strategy is fit to drive, guest count led growth and market share gains, and maximize our MCD growth pillars for the long term. It's a strategy that's rooted in our customer insights and built on our inherent |
4,569 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | our MCD growth pillars for the long term. It's a strategy that's rooted in our customer insights and built on our inherent competitive advantages, and it's the playbook we need to regain form in 2025. Just a couple of weeks ago, we marked McDonald's 70th anniversary. In celebrating longevity, we're actually honoring leadership, 70 years of setting the standard for innovation, pioneering the drive-thru, advancing our menu, and embracing digital transformation to build the best restaurant experience. Time and again, we've proven that our foundation is strong, our commitment to customers unwavering, and our ambition to lead unparalleled. This business has demonstrated an innate ability to anticipate and respond to change. Our agility has always been a key strength now more than ever, and it gives us confidence in the future, even amid macroeconomic uncertainty. We'll stay true to what makes us uniquely McDonald's, great food, exceptional value, and an inclusive environment that welcomes all. Thanks to the strength of our system, McDonald's is well positioned to seize the opportunities before us and keep shaping the future of our industry. With that, we'll take questions. |
4,570 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Operator: Thank you. [Operator Instructions]
Dexter Congbalay: Our first question is from Dennis Geiger.
Dennis Geiger: Thank you. Good morning, guys. I wanted to ask a bit more about the U.S. and what sounds like an encouraging response to the Minecraft marketing campaign and to your value platforms into the second quarter. Recognizing the consumer is pressured, but also that select 1Q headwinds have abated maybe a bit, could you talk a little more about how you're thinking about your recent U.S. sales trajectory, underlying momentum looking ahead over the coming quarters, given some of the exciting marketing and menu news and the overall execution that you touched on? Thank you. |
4,571 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Hi, Dennis. It's Chris. Yeah. I think, the year is evolving as we expect it would. We knew that in Q1, it was about getting our McValue menu embedded, getting consumers aware of that. And then, we were going to be introducing marketing news in Q2 that was going to also soon be followed by menu news. And so, Q1 was for us always going to be sort of the toughest quarter in the year and then we were expecting to see momentum build as the year progressed. As we mentioned in the opening comments, we were really encouraged by our Minecraft promotion globally. In the U.S., this was planned to be a four week promotion, and I think we ended up selling out of the Minecraft collectibles within 10 days to 14 days, so the response exceeded certainly what we were planning for. And then, we've just started doing the soft sell of our chicken strips, our McCrispy Chicken Strips. Advertising hasn't yet started on that, but we're seeing in the restaurants that are selling strips a nice take rate on that as well. So, I think how we sort of expected the year, it's evolving that way. The key for us now for the balance of the year is about execution. And you've got to -- in an environment where there is a pressured consumer, you've got to simply out execute your competitors. And that means you've got to out execute them on your value programs, you've got to out execute them when it comes to marketing and menu innovation. And I think we've seen plenty of evidence that when you do that, there's growth out there to be had. But certainly, if your execution isn't sharp in a challenged environment, you're not going to be able to expect growth. And so that's, I think, where we're focused right now is about making sure we do world class execution.
Dexter Congbalay: Our next question is from David Palmer from Evercore. |
4,572 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from David Palmer from Evercore.
David Palmer: Thanks. I'm wondering, if you can give us some color about some of your key IOM countries, and in what ways are the consumer economic dynamics and McDonald's value perception different today, and the challenge is different than what we see in the U.S. It sounds like so far in this earnings season, like, the global consumer companies, whether it's the informal eating out market or the instant consumable guys are doing a little bit better overseas than you would have thought. It seems to be fairly firm in terms of the consumer backdrop, but I don't know how you feel about that for your key markets. So, any sort of juxtaposition to the U.S. would be helpful. Thanks. |
4,573 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yeah. I think, generally, David, that's a fair characterization. If I were to kind of just do a survey of the world, I think, Europe, it's really country by country. As Ian mentioned, there's only two countries that we've actually seen industry growth. But I think, generally, we feel good about the value programs that we have in place in all big -- all of our big five markets. And we're seeing that -- when you pair that with good menu and marketing execution, you can see great performance or very good performance. So, I think Europe, challenged, but, again, if you have the right value and marketing, you can get that. I think the issue in Europe, maybe a little bit different than the U.S., is just it's a very inflationary environment in Europe, particularly because of beef, and so you've got high-single digit inflation running through the P&L because of what's going on in Europe that compares to the U.S., where F&P inflation is low-single digits. So, it's a more inflationary environment in Europe, which means we just have to be really judicious about how and where we take pricing in that environment. I think, as Ian mentioned, in China, we've seen the business stabilize there. We're encouraged by what we're seeing from our China business. Latin America, I think continues to perform okay. And then, if you go to places like Japan, the business is performing solidly there. So, I think relative to the U.S., the U.S. and the pressure on that lower income consumers, probably the most noteworthy thing, seeing traffic declines of nearly 10% with that low income consumer, I think is the defining feature of what we see in the U.S. relative to rest of world. |
4,574 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Hey, David. It's Ian. I may just add a couple of comments to what the context that Chris has outlaid, and I'll just use our big five IOM markets as a bit of a bellwether because, obviously, it's just building on what Chris laid out. But I mean, I think it's certainly there's still challenge in our industry, obviously, in particular, I think just with lower income consumers and families, which are a big part, as you know, of our international business. I think there are pressures there. I think what we feel -- obviously, as you've heard us talk a lot about what we're focused on is what's within our control, and we feel really good as you heard us talk about upfront in the fact that in those big five markets, we've now got through the first quarter, the essential components of strong value in place in each of those big five markets with EDAP programs and then entry level meal bundles. And so, I think despite the fact that in three of those five markets, we're seeing -- continuing to see a contracting industry traffic. We're taking share in the majority of those markets because I think we're starting to see those value platforms work. And as Chris said, when you combine that, and I'll use France as the example, with kind of new and exciting menu news like the Big Arch launch, which happened in France in early April, and we're seeing some good early results there. You start providing those reasons for consumers to visit. So, again, it's certainly not an easy landscape, but we certainly feel like the business is well-positioned on the back of the work that we did through '24 and into the beginning of this quarter.
Dexter Congbalay: Our next question is from David Tarantino from Baird. |
4,575 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from David Tarantino from Baird.
David Tarantino: Hi. Good morning. My question is on the U.S. McValue platform. And I was hoping maybe you can elaborate on how you think the current construct of that value is working in the current environment and whether you think adjustments are needed. And I guess the nature of my question is, when you think back to the last kind of major downturn in consumer spending, you had the dollar menu in place, and that worked quite well and allowed for significant share gains. So, I'm wondering if you need sharper entry level price points on the value menu in today's environment? |
4,576 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yeah. Thanks for the question, David. Just as background. So, the introduction of McValue, as you'll recall was about getting a branded platform established that we expect to sustain over time. And the point of that was to allow for flexibility, to allow for us over time to change the individual items within that based on what we're seeing from a competitive set, based on what we're seeing in terms of consumer responsiveness, etc. So, it's designed to be agile. As you think about McValue, we feel really good about how the $5 Meal Deal is performing, and Ian talked about in his comments the fact that there's alignment in the U.S. system that $5 Meal is going to continue through the balance of the year. There may be some additional meal at different price points that get offered on top of that. But at a $5 Meal, there's going to be -- that is continuing for the balance of the year. I think when you look at the Buy One, Add One for $1, I'd say, our view on that is, it's performing okay. But frankly, it's not driving nearly the amount of incrementality that we're seeing with the buy one or with the $5 Meal Deal. And at the end of the day, value programs -- the ultimate barometer for performance of a value program is its ability to drive incrementality and we're seeing incrementality for the meal deal, 10 points, 13 points, 12 points higher than what we're seeing with the Buy One, Add One for $1. The Buy One, Add One for $1, certainly, there is a strong take rate, but it's not driving as much incrementality. And so, I think this is a question for the U.S. team with franchisees is any value program requires an investment of margin dollars to get that established. And is the Buy One, Add One for $1 the best investment of margin dollars? I think there's probably an opportunity to look for greater incrementality, but that's going to be a conversation that happens in the U.S., and as to any pivots, that -- I think time will tell on that. |
4,577 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Brian Harbour of Morgan Stanley.
Brian Harbour: Yeah. Thank you. Good morning. Maybe just on that topic, I think you're still running something like mid-single digit menu pricing in the U.S. And obviously, I know you don't control that, but I wonder as that kind of continues to go up, but then you talk more about the value platform and then you may be put more items on it. I mean, does that sort of -- does the spread between the different sides of the menu become a problem? Do you think there is going to be sort of like continued negative mix shift as you talk more about value? I don't know if maybe innovation is a way to solve that because you can sort of introduce items that are at a lower price point. I mean, maybe strips kind of fit that mold. But how do you think about that dynamic kind of over the medium to longer term? |
4,578 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Sure. Well, it's certainly something that you need to be mindful of. We're always taking a look at it. I think part of what we've described here is, you've got to have strong value and affordability programs, but they have to be paired with great full margin marketing and menu innovation, and that when you do the two of those in combination, you get an outcome or result that is positive for the franchisee P&L, positive for our P&L, etc. I think, what you're talking about there in terms of trade and how we think about F&P inflation, you have to just be very disciplined on these things. And I think one of the things that we spend a lot of time with our franchisees on is looking at pass through rates, making sure that we're being judicious about how and where we take pricing, and I think there's been a lot of good progress on that. And then, as you think about other incremental programs that you may need to do, certainly, we test those, we'll do different modelling on those to make sure that in total that the P&L works. I think you can't really decompose and take each individual item, you have to look at it in totality and say, does this program work for our franchisees for the company. But Ian, I don't know if you have anything else you want to add to that. |
4,579 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Yeah, Brian. Good morning. Just maybe a couple of things I'd add. I mean, you're right. If we use the U.S. as the example that menu pricing, obviously, as you would expect has been coming down as inflation has been coming down, and I think we were just under mid-single digit in Q1, most of that frankly was carryover from price taken in 2024. So, assuming inflation keeps coming down, I would expect the contribution from price to kind of continue to moderate in line with that. As Chris said, I mean, obviously, what we've been doing in the U.S. and we're kind of in this non-comparable period is, we've obviously responded to the kind of needs of the consumer, and we've put stronger value and affordability in place. If you remember, the $5 Meal went in place at the end of June in 2024. And so, there certainly is -- until we kind of get more comparable, there is a bit of a mix adjustment. Obviously, the purpose of that mix adjustment, as Chris was talking to is, we want to drive stronger underlying momentum in the business. We want to drive guest count led growth. And then, as you get that guest count led growth and you start complementing that with things like Minecraft or Chicken Strips, you get the check growth, the profit growth, which is obviously the kind of total outcome that you're looking for. But I think until we get to quarter three this year, you're going to continue to see a bit of that mix play in check and margin until we get more comparable.
Dexter Congbalay: Our next question is from Andrew Charles from TD Cowen. |
4,580 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Andrew Charles from TD Cowen.
Andrew Charles: Great. Thank you. Ian, last quarter, you talked about moderate U.S. same-store sales embedded within your 2025 U.S. McOpCo outlook. And I'm curious just following 1Q's challenged performance and your cautious view on the consumer, but couple that with the sharp improvement in April sales, if moderate U.S. same-store sales growth still holds for 2025, or has your embedded assumption changed? And maybe just quickly, if you could also touch on your expectations for 2025 U.S. McOpCo margins, that would also be helpful.
Ian Borden: Yeah, I think -- Good morning, Andrew. I think what I would say is, I think on margins, I think we continue to believe if we use McOpCo margins as the example in the U.S. for this year, for the total year on a percentage basis, we expect to be slightly up on a percentage basis versus where we were in 2024. Obviously, as we've talked about a fair bit this morning, there's still a fair bit of uncertainty in the external environment. And as we've talked about, we're obviously focused on what we can control. We feel really good about the lineup of activities that the U.S. business and the U.S. system have got for the rest of the year, including things obviously like Minecraft and Chicken Strips, which are coming to life over the next few days, but the environment around us is uncertain. And as you've heard me say many times before, obviously, margin growth ultimately is going to be driven by strong top line growth, and obviously, that's what we're working hard in regards to the things that are within our control to deliver over the remainder of the year.
Dexter Congbalay: Our next question is from Sara Senatore from Bank of America. |
4,581 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Sara Senatore from Bank of America.
Sara Senatore: Great. Thank you. I guess, one -- maybe one clarification and a question. The clarification was on the UK. I know that's been historically a very strong business for you. And I couldn't tell if you -- that was one of the markets where you were taking share, and if not, if there was any role of new competition that might be affecting you. And then, the question is on the US. Like, do you have a sense whether those declines in the QSR traffic maybe are coming because people are shifting into other segments? I ask because I think there's a view that maybe the gap between QSR value in other segments, whether it's fast casual or full service has narrowed. So, I didn't know if that was a -- just maybe an intra-industry share shift. Thanks. |
4,582 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yeah. Hi, Sara. To the UK, the UK is not yet gaining share. So, there's still work for us to do in the UK. I'd say, the share losses are to the people that we should be beating. So, I don't think that new competitors are the issue that we need to focus on in the UK. It's about our execution and just doing a better job in that market. So, that's the UK. As it relates to the U.S., just the relative size of the QSR industry versus fast casual, for example, or casual dine, the math just doesn't work. I mean, the gains that you might see with a couple of the players in casual dine are dwarf relative to the size of the QSR industry. So, I don't think it's really accurate to say that this is just a shift amongst the different components. I think we are seeing that people are just being more judicious about cutting back on visits. And so, what you're seeing is you're seeing a decline in frequency where perhaps morning, which is usually, I think, a bellwether daypart occasion, morning now is a place that you're seeing people are choosing either to skip breakfast or they're choosing to eat at home for breakfast. And I think that's more to explain what's going on in the U.S. versus any kind of segment shift. |
4,583 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Hey, Sara. It's Ian. Maybe just a couple of points of texture to build on what Chris has mentioned. I think in the UK, as he said, I mean, I think we clearly believe we've got opportunities that are within our control from an execution standpoint. We've got work to do there. I would just point a little bit to France. I think UK has a much narrower set of opportunities to address. But I think if you think of the complexity of challenge that we've had in France, the progress we've made, I think that gives us a lot of confidence in our ability to translate the appropriate learnings and get our UK business back to where we expect it to be. On the U.S., just to kind of emphasize what Chris said, I mean, the big thing is people are just visiting less, and that speaks to I think the pressure on consumers, consumer sentiment, obviously, that the -- things that we've been talking about for a while now, inflationary pressures, interest rates that are weighing, obviously, particularly on lower consumers, and that's spilling over into middle income consumers right now. And I think when we get value and affordability right, like, the $5 Meal, as we've talked about before, we know that is bringing consumers back in to visit us, and we know when they buy something like the $5 Meal, they're visiting us more frequently. And so, we know if we can get value and affordability right, we can win in the context of what's going on in the marketplace.
Dexter Congbalay: Our next question is from Jon Tower of Citi. |
4,584 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Jon Tower of Citi.
Jon Tower: Great. Good morning. Thanks for taking the question. You had mentioned, Chris, earlier expanding a beverage test. And I was curious, if you could dig into that opportunity a little bit more. Perhaps, what you're expecting from this over time? Are there investments you're anticipating in the franchisees will need to make on an equipment side? And frankly, what -- how you see positioning this platform for the company over time? Do you see this as a full margin product, or perhaps playing on the value front as well? Just maybe sizing up the opportunity and how you see it being communicated to the consumer over time? |
4,585 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Sure. Well, I think as we look at the opportunity from a macro perspective, there's a lot of growth that we see in beverages, and the profitability of beverages is very attractive. So, when you think about profit pool growth in the industry, we expect beverages is going to be a place where there's significant growth in the profit pool, and we're frankly, we think there's more that we can be doing to capture our fair share of that. And we capture on coffee, for example, we're probably roughly around 10% of the coffee share. We think we can do be doing better than that, and then there's growth in other places where you're seeing energy and some other areas that are also strong growth where we don't participate at all. And so, when we think about that, we think there's a lot that we can do. Part of what we've tried to be thinking through is, how do we get after that opportunity. And part of the impetus for us to go do CosMc's was a belief that if we try to do it within an existing restaurant that the complexity may be too great and would impact speed of service and some other things. And so, the thought was, do we need to maybe look at quarantining the complexity in a standalone concept like we did with CosMc's. And one of the things -- I think there's two big things that we've learned out of CosMc's, which are informing the next phase of learning here. The first is that while there is some customization, actually 80% of the order that the consumer wants it to be recipe-ed. So, this is not sort of give me a blank slate and I'm going to design endless customization. 80% of it is recipe-ed, and then there's some customization that goes on the end. So, the complexity or the risk of complexity as we've discovered with CosMc's isn't as great as what we thought it would be. I think the other thing that we've learned on CosMc's is, anytime it has a McDonald's brand attached to it, the consumer is going to want to buy food with that. And so, versus some others that are largely food -- or largely beverage |
4,586 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | the consumer is going to want to buy food with that. And so, versus some others that are largely food -- or largely beverage dominated concepts, food is still going to always be an important part of whatever our beverage offering is because that's consumers' expectation for the McDonald's brand. And so, all of that is informed now. Let's take that into a McDonald's restaurant and see what an expanded lineup of beverages could look like and let's understand what that means in terms of driving incremental traffic, but also food attachment that goes with that. So, as to the ultimate investment that's going to be required, I don't think we know because we don't know the answer yet, but we're going to continue to test and learn. And what I do know is that we're committed to going after beverages. It's part of why we set up beverages as one of our key three category structures just because of the opportunity that we see there. |
4,587 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from John Ivankoe from J.P. Morgan.
John Ivankoe: Hi. Thank you. A two-parter, if I may. Firstly, it's fairly apparent looking around the country, the amount of core menu pricing difference that you have. And, obviously, I understand all the different economic and competitive reasons for that. But the reality is that there's not a lot of price certainty specifically around the core menu. So, do you think that, that is an opportunity? Is it a risk? I mean, if you were to pull menus in certain places down. So, just do talk about core menu price certainty and whether that makes sense to drive that. And secondly, the boneless chicken market has changed actually quite significantly from the last time you had Chicken Selects. So, if you can kind of comment on your -- the rate of success that you're expecting from this version of McCrispy maybe versus what you had before when the competitive market was in fact different? Thank you. |
4,588 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Sure. Well, at the end of the day, pricing is an inherently local decision, and it's informed by the trading area that exists around each of our individual restaurants. And our commitment and the focus is, we need to make sure that relative to the trading area that we're competing in that we're offering strong value, and that's what shows up on both the menu board and that also shows up with the promotions and digital offers that we're running. So, I think about it less as around having predictability across the country around a common menu, and it's more about we need to be competitive within the trading areas that we're competing. I think if you look at what's been going on with menu prices right now, because the inflation has come down and we're not nearly seeing as inflationary environment as we saw certainly last year and into -- in 2023, they're not seeing the big moves on core menu that you saw previously. And I would expect that that's going to continue. As I mentioned, F&P inflation is low-single digits. So, there's not a lot of pressure on that. And I think our franchisees also recognize how important it is for us to stay disciplined on this, and we look at pass through rates, as I described earlier, to make sure that we understand the consumers' willingness to accept any pricing. So, that would be my comment on that. As to the -- how the markets changed, certainly, there's been a ton of growth in that space. And it's an area that we're hearing from our customers that they're looking for us to have a great offering there and they're thinking about other ways that we can participate in that market. And so, we've talked about chicken strips is going to be our first sort of reentry in that. We feel excited about doing it under the McCrispy platform. We think we can get a halo benefit that's associated with that. And then, we've also set-up that, once you have the strips in, strips is going to allow for us to reintroduce snack wraps, which is going to be coming later in the year as well. |
4,589 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | strips in, strips is going to allow for us to reintroduce snack wraps, which is going to be coming later in the year as well. So, I think, for us, it's just the market continues to show the consumer is interested in this product. We want to make sure that we're meeting our customers' needs on that. And I think what we've got with both strips and then later with snack wraps is going to be a great addition to the menu. |
4,590 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Lauren Silberman from Deutsche Bank.
Lauren Silberman: Thank you very much. I wanted to unpack U.S. comps a bit more. Can you talk about what you're seeing across the low, middle and high income consumer? I know you mentioned industry traffic, but trying to get a better sense of what's going on with market share across cohorts. Are you seeing any increase in value mix as a result of McValue? And then, any color on what you're seeing across regions and dayparts would be helpful. Thank you. |
4,591 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: Hey. Good morning, Lauren. It's Ian. Well, look, I think, I'll kind of just reiterate what we've talked about a fair bit. I mean, I think there's pressure on both low and middle income consumers in the U.S. I think as you heard Chris say, low income consumer was down close to double-digit; middle income consumer in the quarter from an industry perspective was down close to that. The high income consumer is still spending pretty consistently and pretty robustly. And as you've heard us talk about before, I mean, we over index to low consumers in terms of our mix versus industry mix. And I think, to a lower extent, but also over index to middle income consumers. And so, obviously, as those consumers are softer, that's already going to put pressure for us, which is where having the strong value and affordability that we've talked about come into play is really important so that we're winning. And I think I would just emphasize that in Q1, if you look at our comp guest count gap versus the majority of our near end competitors that was positive through Q1. So, that obviously tells us that we're winning on a traffic -- on a comparable traffic basis versus the broader industry. So, again, our work is to continue to make sure we've got the proposition despite I think what's happening with consumers to be winning in the context. As I said, I think we have got a strong value and affordability lineup and we're starting to see an even better momentum as we get into things like Minecraft, and we feel really confident, as Chris was talking about with the strips launch that's going to happen over the next few days, and as we get that combination to come together. We feel pretty good about being able to win against all those consumer groups as we work through the rest of the year.
Dexter Congbalay: Our next question is from Greg Francfort from Guggenheim. |
4,592 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Greg Francfort from Guggenheim.
Gregory Francfort: Hey, thanks for the question. My question is maybe before this value launch, my understanding was a lot of the value that the customer is using was going through the mobile app and that part of the value launch was maybe to diversify that message a little bit. I'm curious how that's evolved since the value launch, and if the mix of value that's going through the mobile platform is where you want it to be, above, below? Any thoughts on that?
Chris Kempczinski: Yeah. It's tough to generalize on that because there's -- within the app, there's local value that's being offered. And so, it's -- there's national value and then there's local value that goes in combination with that. I do think what we've talked about in previous calls is that until you get to a point where the usage of the app is the majority of your traffic, relying on that as the primary source of value, it just doesn't work because you're not reaching the majority of your consumers. And so, for that reason, having a broad platform like, we have McValue that's available to everybody, I think is important. It's an imperative that you have that, which is why we've spent the time and energy getting that launched properly. The digital offers are going to continue. They've probably come down a tick on that. It's tough to know how much of that was related to pulling back on digital offers versus just having a stronger McValue proposition out there that maybe is now driving someone to choose McValue as opposed to the digital offer. So, I don't think there's anything thing specific that you should infer from any mix change that we're doing. There's not a purposeful pullback in digital offers to do more on McValue, but I think you're certainly seeing the consumer change as our offers change.
Dexter Congbalay: Our next call is from Danilo Gargiulo from Bernstein. |
4,593 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next call is from Danilo Gargiulo from Bernstein.
Danilo Gargiulo: Great. Thank you. There are some rising concerns on international boycotts, generally speaking, as U.S. brands. So, I'm wondering, if you have seen any signs of weakness attributable to that and how you're expecting that to be evolving? And to the extent that you did, which markets are you seeing under most pressure and what proactive measures are you contemplating to continue to protect the brand as you have so far? Thank you.
Chris Kempczinski: Sure. Well, we've actually spent some time researching this, and we've done three different surveys, global surveys in all of our top markets to just assess the consumer's perspective. And we acted in the context of three things. How does the consumer feel about America, the country? How does the consumer feel about American brands? And then, specifically, how does the consumer feel about McDonald's? And the good news from our perspective is that there has been no change in how the consumer globally feels about the McDonald's brand. So, we're not seeing any American sentiment have any impact on our business. What we have seen in our survey work is that there has been an increase in people in various markets saying that they are not going to be or they're going to be cutting back their purchase of American brands. And we've seen an uptick in anti-American sentiment, call it, 8 points to 10 points increase in anti-American sentiment, most pronounced in Northern Europe and Canada, not a big deal in Latin America, not a big change -- or nothing that we're seeing in Asia. But again, the key point here is, while there has been, I think, an uptick in general in anti-American sentiment, that's had no impact on our business, and consumer sentiment toward the McDonald's brands remained strong. |
4,594 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: And maybe just the piece I'd add on the end, Danilo, is just -- I mean, I think one of the strengths, as you know, of our business model is that the vast majority of our restaurants are operated by franchisees that kind of live and work and support the communities they do business in. And obviously, we operate in over 100 countries. We're very successful in all those countries that we operate. I think that's because our business and our brand has been able to adapt appropriately to the kind of cultures and communities that we do business in. And I think certainly most of our -- the vast majority of consumers understand and appreciate that.
Dexter Congbalay: Our next question is from Eric Gonzalez from KeyBanc.
Eric Gonzalez: Thanks. It's clear that McDonald's is at its best when it offers compelling value to drawing guests and has something differentiated or credible for the customer to trade into. We saw this prior to the public health incident with the Collector's cups and the Chicken Big Mac. Is it fair to say, it's the first quarter lack to the second half of that equation? And as we moved into the second quarter, you had a winner with the Minecraft Meal, but that sort of boost isn't something that's going to last more than a few weeks. So, I'm just wondering, do you have enough in the marketing and innovation pipeline on the premium side that's going to drive a more sustainable lift in sales? |
4,595 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Well, I think as I touched on, we're excited about in the U.S. and in our other markets, the balance of your plans that we have and it's not just relying on one thing. I think as we look at our marketing plans, there's a steady flow of menu innovation that goes from now through the end of the year in a number of our markets. And then, there's also marketing programs that we have on top of this. And I think part of when you get strong menu news paired with strong marketing, beyond just the benefit that you get in the window, you start to see improvement in baseline. And so, that would be our expectation is, as we continue to have more menu innovation, as we continue to have strong marketing programs, it has a positive impact on baseline, which is sort of the gift that keeps on giving. |
4,596 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Ian Borden: And Eric, maybe just to build, I mean, I think you touched on it. But as you remember, we had really strong momentum in our U.S. business pre kind of the food safety incident. Obviously, that was a disruption. As we said in our last call, expected in Q1 this year that the impacts of the food safety incident would be fully behind us. They are; we fully recovered. But if you just think of the sequence of activities that we've had in the U.S. business, obviously, the disruption of the food safety incident, full focus on an effort on recovery, then we've spent Q1 really getting the McValue brand, equity and platform embedded and emphasize. So, we really haven't until Minecraft in April had a big kind of consumer resonating menu or marketing focused activity. And I think you're right, those things are obviously moments in time. But as you do those and as you do those consecutively, you kind of continue to add to the momentum that you're building in the business. So, you start that momentum, obviously, with the strong value and affordability and then you build on that with each of these activities. And as we talked about earlier, we certainly feel really confident about the lineup of activities that our U.S. business has, starting with Minecraft and over the remaining course of the year.
Dexter Congbalay: Our next question is from Jeffrey Bernstein from Barclays. |
4,597 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Dexter Congbalay: Our next question is from Jeffrey Bernstein from Barclays.
Jeffrey Bernstein: Great. Thank you very much. Actually, perfect follow-up to my question. I feel like you do have a lot of new news coming. Again, you mentioned Minecraft in April, Crispy Chicken in May, Snack Wrap to follow. I know in the past there was maybe some caution on too much new news at McDonald's in terms of the impact on speed of service and operations at the restaurant level. So, just wondering how you feel the teams are able to handle that when obviously speed is so important? And it kind of ties into, I think you mentioned that you're competing so much more against specialists now, which I assume are peers focused on one specific line of product. I'm just wondering, how your new team can be more effective and better competing against some of those players? Any early learnings you have or expectations you have in terms of being able to better compete against those single line competitors? Thank you. |
4,598 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | Chris Kempczinski: Yeah. Sure. I'll address the specialist question, then I'll let Ian pick up the first part of your question. But one of the things that I think is -- we're seeing is, as I mentioned, that there are more people that are going after specific product verticals, whether that's chicken, whether that's beverages, you're seeing that in salads and some other places. And our menu and part of what I think is the appeal of McDonald's is that we have a broad menu, and it's a menu that can attract the whole family because there's something for everybody on our menu. The challenge with that if you're a managing director running a country is at the end of the day, you're just focused on, in total, hitting your comp sales target, hitting your profit target, etc. And while you pay attention or you're looking at your share within those individual verticals, you're not waking up every single day thinking about am I gaining share in chicken? Am I gaining share in beef? Am I gaining share in beverage? You're thinking about, am I gaining market share in total? And so, the opportunity for us is to have teams that have that degree of focus, who are waking up every single day, looking at our performance across the globe and making sure that we absolutely are winning in chicken, that we're winning in beverages, that we're winning in beef or continue to win in beef. And I think part of what we wanted to do with that as well is to win in these categories, it's not just coming up with a marketing idea or coming up with a brand name. It goes to supply chain and sourcing. So, what's the type of product that we're sourcing? It goes to the equipment that we're using. It goes to the processes that we're doing in the restaurant. It goes to certainly the menu offering and the menu innovation that goes along with that, and then how we activate that with consumers. Now, with these category teams, we have all of those groups working in combination underneath a category leader who again is charged with waking up every single day and |
4,599 | MCD | 1 | 2,025 | 2025-05-01 08:30:00 | McDonald's Corporation | 139,488 | of those groups working in combination underneath a category leader who again is charged with waking up every single day and focused on winning in their specific verticals. So, that I think is going to be the power for us. Ultimately, how it gets executed is going to be at the country level. But I think we have sort of a good one, two punch between a focus at the country level, but also keeping an eye towards making sure that we're winning globally in these important categories. |
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