Picture: BLOOMBERG
Picture: BLOOMBERG

Bengaluru — On Wednesday, McDonald’s reported quarterly comparable sales growth and profit above market expectations, as the world’s largest burger chain benefited from its revamped stores, new delivery partnerships and higher menu prices.

Over the past few years, McDonald’s has focused on improving dining experience by bringing technology to stores and shoring up delivery services, while also adding new burgers, beverages and breakfast foods to its menus to lure customers.

McDonald’s also said it has closed several hundred restaurants in Hubei province, which is at the centre of a viral outbreak in China that has killed more than 100 people and up-ended daily life for millions, Bloomberg reported. The fast-food chain still has about 3,000 locations open in China, executives said during a call with analysts on Wednesday.

CEO Chris Kempczinski, who took charge in November after the previous CEO was dismissed, said the global, comparable sales growth in 2019 was the chain’s highest in more than 10 years.

McDonald’s reported a 5.9% rise in global, comparable sales, both for the full-year and the fourth quarter, beating analysts’ forecast for a 5.23% growth, according to IBES Refinitiv.

The group forecast a 5% to 7% constant currency rise in selling, general and administrative expenses spending on tech this year, after an increase of just 1.3% in 2019, as it continues to invest in technology, research and development.

Over the past few years, McDonald’s has focused on improving the dining experience with kiosks and digital displays, shoring up delivery services and adding new burgers, beverages and breakfast foods to its menus. It also began modernising stores across the globe and bought two smaller technology firms that focus on digitalising stores and drive-through menus.

Sales in US restaurants open for more than 13 months rose 5.1% for the fourth quarter ended December 31, slightly above the estimate of a 4.67% increase. But guest numbers for its US restaurants fell 1.9% in the quarter, and were just 1% up overall.

“Returning to guest-count growth in the US remains our top priority,” CFO Kevin Ozan said in a post-earnings call. “Sluggish industry traffic growth and unit expansion continue to fuel an aggressive battle for market share.”

The company’s stock, a component of the blue-chip Dow Jones industrial index, was flat in pre-market trade after initially gaining on better-than-expected quarterly results.

Excluding one-time items, the company earned $1.97 per share, 1c above Wall Street expectations.

Net income rose 14% to $2.08 per share. Revenue rose 3.6% to $5.35bn, slightly above the estimate of $5.31bn.

The stock gained 11.3% in 2019, lagging behind some of its rivals such as Chipotle and Starbucks and the broader S&P 500 restaurants index that rose nearly 22% in 2019.

Reuters

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