To re-gain momentum this year, the chain is focused on its value offerings alongside menu news such as snack wraps and a chicken strip offering
McDonald’s fourth quarter results, released Monday before market, were headlined by a domestic same-store sales decline of 1.4%, which is perhaps no surprise given that the chain navigated a rare E. coli outbreak in October that impacted its popular and high-margin Quarter Pounder burger at about 900 restaurants.
The food safety incident piled on the chain’s challenges throughout 2024, which also included a pullback from lower-income consumers, with whom the company overindexes. For the full year, McDonald’s same-store sales were up just 0.2%. The company’s revenues were -0.3% year-over-year, while net income fell by 1% to $2.02 billion during the quarter and were -3% for the year, or $8.22 billion.
“Our performance in 2024 did not meet our expectations,” chief executive officer Chris Kempczinski said during the company’s earnings call Monday morning.
Chief financial officer Ian Borden added that the entire quick-service industry was challenged as pressure on spending persists for low-income customers and families.
Both executives, however, expect the company to recover fully from its E. coli outbreak by the beginning of the second quarter based on sequential improvement in traffic trends through the end of the year. In Q4, the U.S. business reported slightly positive comparable guests counts alongside a decline in average check, indicating that its $5 Meal Deal, first introduced in June, is attracting customers while keeping topline numbers somewhat muted. Kempczinski said the January launch of the McValue platform – which includes that Meal Deal, as well as a Buy-One-Get-One for $1, and local deals – will help the company “reclaim value leadership” while providing customers with the flexibility they’re seeking.
Borden added that this shift to value, and lack of topline growth, didn’t “drive margin improvement,” though executives do expect margins to be “slightly up” in 2025. Kempczinski also noted that franchisee cash flow declined last year because of various headwinds, but they’re still “north of half a million per unit.”
“As we get some headwinds behind us and back to stronger momentum, that will work its way through to the bottom line,” he said.
Executives are confident in the playbook for 2025 to get back to that momentum, including a value foundation overlayed with a “strong pipeline of marketing.” The pipeline will include new product news, especially in the chicken category. Kempczinski said McDonald’s has the opportunity to gain another point of chicken share by 2026 and will achieve that by bringing back Snack Wraps this year (which were removed during the pandemic in 2020), as well as a “chicken strip offering,” and the periodic return of the Chicken Big Mac, which also helped the company gain share in chicken in 2024.
New unit growth is also a major priority, and the company expects to open 2,200 new restaurants, about 1,000 of which will be in China, for over 4%-unit growth systemwide this year. This is expected to contribute over 2% in systemwide sales growth and puts the company on track to reach 50,000 global units by the end of 2027.
Loyalty is also becoming a bigger lever for McDonald’s to pull, and the company is on track to achieve its target of 250 million 90-day active loyalty users by 2027. To date, there are more than 170 million 90-day users, and the program generated approximately $30 billion in sales in 2024.
“Digital and loyalty are going to be important ways for us to continue to drive check,” Borden said. “Loyalty drives more visits, and those customers spend more over time. As we build new capacities, we know we’ll get those customers to even spend more. Digital will be an important component on how we drive check and frequency as we move forward.”
McDonald’s Q4 by the numbers
Global comparable sales increased 0.4%
U.S. comp sales decreased 1.4%
International Operated Markets segment increased 0.1%
International Developmental Licensed Markets increased 4.1%
Consolidated revenues were flat
Systemwide sales increased 2%
Revenue fell 0.3% to $6.39 billion
Consolidated operating income increased 2%
Diluted earnings per share was flat at $2.80
Full year
Global comparable sales decreased 0.1%
U.S. increased 0.2%
International Operated Markets segment decreased 0.2%
International Developmental Licensed Markets segment decreased 0.3%
Consolidated revenues increased 2%
Systemwide sales increased 1% (2% in constant currencies)
Consolidated operating income increased 1%
Diluted earnings per share was $11.39, a decrease of 1%
Contact Alicia Kelso at [email protected]
You May Also Like
