McDonald’s Restaurants released comparable sales results for April and May and an update on the Covid-19 impact to the company’s operations on June 16, ahead of its second quarter earnings announcement. Among highlights of the report:
- 95% of its restaurants around the world are open for business.
- Comparable sales have improved sequentially from late March through May.
- The company, which operates 38,000 units in over 100 countries, is investing to accelerate recovery.
“Our strong foundation and the unique system advantages, including a high percentage of drive-thru restaurants and investments in delivery and digital, have enabled us to adapt to the changing landscape presented by the Covid-19 outbreak. I am confident in our ability to manage through the immediate challenges and emerge from this pandemic in a position of competitive strength,” said Chris Kempczinski, president and chief executive officer of the Chicago, Illinois, USA-headquartered company.
April and May 2020 Comparable Sales*
| Increase/(Decrease) | ||||||||||
| Month ended
April 30, 2020 |
Month ended
May 31, 2020 |
Quarter to date through May 31 |
||||||||
| USA | (19.2) | % | (5.1) | % | (12.0) | % | ||||
| International Operated Markets | (66.7) | (40.5) | (53.4) | |||||||
| International Developmental Licensed Markets and Corporate | (32.3) | (20.0) | (26.2) | |||||||
| Total | (39.0) | % | (20.9) | % | (29.8) | % | ||||
| * Comparable sales are compared to the same period in the prior year and represent sales at all restaurants, whether operated by the company or by franchisees, in operation at least thirteen months, including those temporarily closed. | ||||||||||
Restaurant Update
Below is a summary of the operating status of McDonald’s restaurants around the world as of June 15, 2020. The company continues to follow the guidance of expert health authorities to ensure the appropriate precautionary steps are taken to protect the health and safety of its personnel and customers.
| Percent of Operating Restaurants*
|
|||||||
| As of | April 30, 2020 | May 31, 2020 | June 15, 2020 | ||||
| USA | 99% | 99% | 99% | ||||
| International Operated Markets | 45% | 75% | 90% | ||||
| Australia | 95% | 100% | 100% | ||||
| Canada | 75% | 75% | 80% | ||||
| France | 0% | 95% | 95% | ||||
| Germany | 85% | 95% | 95% | ||||
| Italy | 0% | 95% | 100% | ||||
| Russia | 70% | 70% | 70% | ||||
| Spain | 0% | 80% | 95% | ||||
| United Kingdom | 0% | 0% | 70% | ||||
| International Developmental Licensed Markets | 80% | 85% | 90% | ||||
| Total | 75% | 90% | 95% | ||||
| * Restaurants include those with limited operations including drive-thru, delivery, and/or take-away. | |||||||
USA Market
- Substantially all restaurants continue to operate drive-thru, delivery, and/or take-away with a limited menu. Limited hours may also apply.
- Over 1,000 restaurant dining rooms have reopened with reduced seating capacity.
- Approximately 100 restaurants remain closed primarily due to their locations (e.g., unique sites such as malls).
International Operated Markets
- The vast majority of markets are operating with drive-thru and delivery (where available) with limited menus and hours. Some markets are operating take-away and/or dine-in with restricted capacity.
- As reported in the company’s first quarter earnings release on April 30, 2020, restaurants in France, Italy, Spain and the United Kingdom were temporarily closed for the month of April.
- Also as reported in first quarter earnings release on April 30, markets in Australia, Canada, Germany and Russia had limited operations, including some temporary restaurant closures, during the month of April.
International Developmental Licensed Markets
- Substantially all restaurants in China and Japan are open to serve customers, with limited dining room capacity.
- Brazil has resumed limited operations in approximately 80% of restaurants.
Accelerate Recovery through Investments in System
In response to the outbreak of Covid-19, McDonald’s has taken a number of timely, targeted and temporary actions to provide franchisee financial liquidity assistance, primarily through deferral of cash collection for certain rent and royalties earned from franchisees in substantially all markets, enabling them to continue supporting their workforces and serving their communities. In addition, as previously announced on May 13, 2020, the company has committed to further investment in the system through additional financial support to accelerate franchisee recovery in three key areas, as outlined below.
Advertising Contributions
McDonald’s expects to invest about $200 million through an incremental marketing contribution across the United States and International Operated Markets to accelerate recovery and drive growth. The amount represents one month of advertising cooperatives contributions and is in addition to the ongoing contributions from franchised and company-owned restaurants. This marketing contribution will be recorded in the second quarter of 2020 with the vast majority recorded as Selling, General and Administrative Expenses.
Targeted Franchisee Financial Support
McDonald’s is providing additional targeted financial support to those limited franchisee organizations most negatively impacted across the system. The company is analyzing the targeted support needed based on each individual franchisee’s financial situation.
Delivery Support
In a limited number of international markets, McDonald’s is providing support for certain restaurants facing unique circumstances, such as those temporarily operating with a majority of their sales as delivery sales.
