McDonald's global sales suffer as coronavirus lockdowns limit operations
Chicago-based restaurant chain missed profit expectations
Former McDonald's USA CEO Ed Rensi discusses 200 McDonald's restaurants closing during the coronavirus pandemic and the future of business in the new era.
(Reuters) - McDonald's Corp on Tuesday reported a bigger-than-expected drop in global same-store sales and missed profit expectations, as its restaurants were shut due to the COVID-19 pandemic, limiting operations to only drive-thru and delivery.
Shares of the Chicago-based restaurant chain fell about 2% before the opening bell.
Global same-store sales fell 23.9% for the second quarter ended June 30, dragged down by big international markets including the United Kingdom, France and Latin America.
Analysts had forecast a 23.24% fall, according to IBES data from Refinitiv.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MCD | MCDONALD'S CORP. | 298.56 | +1.21 | +0.41% |
In the United States, where it operates more than a third of its restaurants, same-restaurant sales fell 8.7%, but were better than the anticipated 9.97% fall, as most locations were able to stay open with drive-thru and delivery options.
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As lockdowns eased, sales improved and losses were not as bad, providing some optimism for a measured rebound.
Customers dine outside McDonald's in Union Square as New York City moves into Phase 2 of re-opening following restrictions imposed to curb the coronavirus pandemic on June 24, 2020. (Photo by Noam Galai/Getty Images)
Restaurants have been struggling to cope with the changing dynamics and consumer behaviors around the health crisis, forcing them to simplify menus and shift largely to online and mobile orders for pickup, delivery and drive-thru.
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"Our strong drive-thru presence and the investments we've made in delivery and digital over the past few years have served us well through these uncertain times," Chief Executive Officer Chris Kempczinski said.
To help drive its recovery, McDonald's, like many other U.S. restaurant chains and retailers, said face coverings would be mandatory at its stores in the United States and employees would offer one to anyone entering without a mask.
The company said about 96% of its restaurants were operating with drive-thru, delivery or reduced seating capacity.
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Revenue fell 30.5% to $3.76 billion, but beat the estimate of $3.68 billion.
Net income fell 68% to $483.8 million. Excluding one-time items, McDonald's earned 66 cents per share, 8 cents below expectations.
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(Reporting by Nivedita Balu in Bengaluru and Hilary Russ in New York; Editing by Bernard Orr)