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Thu 28th Jan 2021 - McDonald’s reports global like-for-likes down 1.3% in fourth quarter, UK business sees positive growth
McDonald’s reports global like-for-likes down 1.3% in fourth quarter, UK business sees positive growth: McDonald’s has reported global like-for-likes were down 1.3% in its fourth quarter ending 31 December 2020 – but the UK business saw positive growth throughout the period. Global like-for-like sales for the full year fell 7.7%, reflecting positive comparable sales in the US of 0.4%, and negative comparable sales in the “international operated” segment, which includes the UK, and “international developmental” licensed segment of 15% and 10.5%, respectively. Chief executive Chris Kempczinski said: “2020 will be remembered as one of McDonald’s most challenging, yet inspiring, moments in our long history. The resilience of the McDonald’s system was on display – making safety and service a priority, putting our customers and people first, and running great restaurants. Against an uncertain backdrop, we are committed to staying true to our values and our brand purpose to feed and foster communities. By investing for the future and leveraging competitive strengths within our ‘Accelerating the Arches’ strategy in drive-thru, delivery and our growing digital presence, we’re confident we can continue to capture market share and drive long-term sustainable growth for all stakeholders.” US fourth-quarter like-for-likes were up 5.5%, benefiting from strong average transaction value with positive comparable sales across all major dayparts. The company’s strategic marketing investments and promotional activity, including those featuring core menu items, had a positive impact on comparable sales, the company said. Like-for-like sales in the fourth quarter for the “international operated” segment were down 7.4%. McDonald’s said like-for-like sales remained negative in most markets as restaurant operating channels and hours were significantly impacted by covid-19 resurgences and the related government restrictions that have carried into 2021 in most countries. The comparable sales decline in the quarter was primarily driven by France, Germany, Italy and Spain. While comparable sales remained negative in most markets, comparable sales were positive for Australia and the UK throughout the quarter. In the “international developmental” licensed segment, fourth-quarter like-for-like sales were down 3.6%. McDonald’s said results were impacted by negative like-for-like sales primarily in Asia and Latin America, partly offset by strong comparable sales in Japan. McDonald’s stated: “The company has continued to follow the guidance of expert health authorities to ensure the appropriate precautionary steps are taken to protect the health and safety of our people and our customers. As a result of covid-19 resurgences throughout the quarter, there have been numerous instances of additional government restrictions on restaurant operating hours, limited dine-in capacity in most countries and, in some cases, mandated dining room closures particularly in the ‘international operated’ markets. These restrictions, which have carried into 2021, are impacting most of the company's key markets outside of the US, particularly those with fewer drive-thru restaurant locations. The company expects some restrictions in various markets so long as the covid-19 pandemic continues.” McDonald’s said the results also included higher selling, general and administrative expenses for the quarter and year reflecting $80m and $100m, respectively, for the company’s five-year commitment to Ronald McDonald House Charities; one-time investments in renewed brand communications as part of the “Serving Here” campaign launch that was announced with the new growth strategy, Accelerating the Arches; and lower incentive-based compensation expense. More than $200m of incremental franchisee support was provided for the year for marketing to accelerate recovery and drive growth across the US and “international operated” markets, the majority of which was recorded in selling, general and administrative expenses. About $100m was recorded in the US and the remaining support was recorded in the international operated markets segment. McDonald’s said there were higher restaurant closing costs for the quarter and year of $30m and $68m, respectively, in both the “international operated” markets and in the US. The US costs were primarily related to planned closings of McDonald’s in Walmart locations. There was also an increase of reserves for bad debts of $58m for the year, related to rent and royalty deferrals.

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