McDonalds reported results that were somewhat in line with analyst expectations. In the US, same-restaurant sales were in line at +2.3%.
Outside the US, same-store sales were slightly better than what analysts had expected. This included +5.2% in International Lead Markets, +4.8% in High Growth Markets and +7.1% in Foundational Markets.
Comparable sales were driven by positive pricing and negative traffic.
4th Quarter Highlights
- Due to the impact of the Company’s strategic refranchising initiative, consolidated revenues decreased 3%. These were flat excluding foreign currency impact.
- Systemwide sales increased 5% in constant currencies.
- Consolidated operating income decreased 7% (4% in constant currencies)
- Adjusted EPS was $1.97, an increase of 15% (18% in constant currencies) over prior year earnings per share (excluding $0.84 per share of prior year net tax cost under the Tax Act).
Conference Call Highlights
- Company expects margin pressure in 2019 from labor, remodels, commodity inflation and foreign currency translation
- Most franchisees are still working towards 2020 for renovation completion
- Market share gains have slowed (100bp gain vs. sandwich peers in 2018 but flat in 4th quarter)
- Company believes delivery is 70% incremental. Sees 2x average check from delivery orders.
- In markets where Kiosks have been available, company sees usage at 80-90% of in-store customers.
