Chain's expanded delivery reach drives 5.1% growth in U.S. same-store sales; traffic down 1.9% for 2019
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McDonald’s Corp.'s strategic move last summer to drop Uber Eats as an exclusive third-party delivery partner is paying off.
The Chicago-based quick-service chain, which added DoorDash and Grubhub to its last-mile delivery mix in the second half of 2019, posted U.S. same-store sales growth of 5.1% for the fourth quarter ended Dec. 31, 2019. That's up compared to 2.3% growth for the same quarter, previous year.
Delivery was a strong contributor to same-store sales growth as the company was able to penetrate new markets by adding two more delivery partners. Globally, delivery has become a $4 billion business for the brand.
In 2019, McDonald’s posted systemwide sales of more than $100 billion. Global same-store sales for the year grew 5.9%, the highest in more than 10 years. In the U.S., comparable restaurant sales grew 5% for the year — the best since 2006, the company said Wednesday during earnings.
McDonald's president and chief executive officer Chris Kempczinski, who became CEO in the fourth quarter, called 2019 a milestone year. In the U.S., comparable restaurant sales grew 5% for the year – the best performance since 2006, McDonald’s said.
“Through the execution of our Velocity Growth Plan, we once again served more customers the food they crave, marking three consecutive years of global comparable guest count growth,” Kempczinski said in a statement. “As we look to 2020, we will continue to deliver delicious food and optimize our investments as we further transform the experience for our customers through added convenience and digital engagement.”
Chief Financial Officer Kevin Ozan said the brand’s significant achievements are tied to the chain’s Velocity Growth Plan, which includes improving the customer experience through menu innovation, store remodels and new technologies.
“As we begin 2020, we remain committed to our capital allocation philosophy to reinvest in the business to drive profitable growth and return all free cash flow to shareholders through a combination of dividends and share repurchases,” Ozan said in a statement.
Still, guest counts in the U.S. continue to be a problem for the brand. In 2019, U.S. traffic was down 1.9%.
On Tuesday, the brand announced plans to expand its Chicken McGriddles and McChicken Biscuit breakfast sandwiches systemwide. The expansion comes on the heels of The Wendy’s Co.’s breakfast push. McDonald’s also noted that it was working on speed of service at the drive-thru. The company said that its McDonald’s USA division had reduced drive-thru wait times by an average of 20 seconds across all dayparts in 2019.
Total revenue for the quarter increased 4% to $5.35 billion. The company reported quarterly net income of $1.6 billion, or $2.08 cents per share, compared to $1.4 billion, or $1.82 per share, for the same quarter, prior year.
McDonald's closed 2019 with 13,846 U.S. restaurants, down from 13,914 in 2018.
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Updated: This story was updated to add more details from Wednesday's earnings call.
