MCDONALD'S CORPORATION Item 8.01. Other Events.
McDONALD'S REPORTS APRIL ANDMAY 2020 COMPARABLE SALES AND PROVIDES UPDATE ON COVID-19 IMPACT TO THE BUSINESS
We are providing comparable sales results and an update on the COVID-19 impact to the Company's operations ahead of our second quarter earnings announcement.
Highlights:
• 95% of
• Comparable sales have improved sequentially from late March through May.
• The Company is investing in the System to accelerate recovery.
"Our strong foundation and the unique advantages of the
April and
COMPARABLE SALES*
Increase/(Decrease)
Quarter
to date
through
Month ended Month ended May 31,
April 30, 2020 May 31, 2020 2020
U.S. (19.2 )% (5.1 )% (12.0 )%
International Operated Markets (66.7 ) (40.5 ) (53.4 )
International Developmental Licensed Markets &
Corporate (32.3 ) (20.0 ) (26.2 )
Total (39.0 )% (20.9 )% (29.8 )%
* Comparable sales are compared to the same period in the prior year and
represent sales at all restaurants, whether operated by the Company or by
franchisees, in operation at least thirteen months, including those
temporarily closed.
• Comparable Sales:
• U.S. : Comparable sales results steadily improved throughout the months of
April and May; however comparable sales and guest counts remained
negative, particularly the breakfast daypart. Comparable sales continue
to benefit from strong average check growth.
• International Operated Markets: Comparable sales results for both April
and May were heavily impacted by temporary restaurant closures in the
United Kingdom and France , and to a lesser extent Italy and Spain . For
markets that have remained open, sales trends continued to improve in
May. Performance reflects positive comparable sales in Australia driven
by strong drive-thru performance, and negative comparable sales in
Germany , Canada and Russia .
• International Developmental Licensed Markets: Comparable sales results
for both April and May were primarily impacted by temporary restaurant
closures across nearly all geographies, most notably in Latin America .
April and May results also reflected continued negative comparable sales
in China and positive comparable sales in Japan .
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Restaurant Update
Below is a summary of the operating status of
PERCENT OF OPERATING RESTAURANTS*
April June
30, 15,
As of 2020 May 31, 2020 2020
U.S. 99 % 99 % 99 %
International Operated Markets 45 75 90
Australia 95 100 100
Canada 75 75 80
France 0 95 95
Germany 85 95 95
Italy 0 95 100
Russia 70 70 70
Spain 0 80 95
United Kingdom 0 0 70
International Developmental Licensed Markets 80 85 90
Total 75 % 90 % 95 %
* Restaurants include those with limited operations including drive-thru,
delivery, and/or take-away.
• Substantially all restaurants continue to operate drive-thru, delivery,
and/or take-away with a limited menu. Limited hours may also apply.
• Over 1,000 restaurant dining rooms have reopened with reduced seating
capacity.
• Approximately 100 restaurants remain closed primarily due to their locations
(e.g., unique sites such as malls).
International Operated Markets: • The vast majority of markets are operating with drive-thru and delivery
(where available) with limited menus and hours. Some markets are operating
take-away and/or dine-in with restricted capacity.
• As reported in the Company's first quarter earnings release on
2020, restaurants in
temporarily closed for the month of April.
• Throughout the month of May,France ,Italy andSpain began reopening restaurants. These markets have now resumed limited operations in substantially all restaurants. • TheUnited Kingdom began reopening restaurants in June, and the market plans to have a vast majority of restaurants operating with drive-thru and delivery by the end of June. • Also as reported in the Company's first quarter earnings release onApril 30, 2020 , markets, such asAustralia ,Canada ,Germany andRussia had limited operations, including some temporary restaurant closures, during the month of April. • During the month of May,Australia andGermany reopened nearly all restaurants, including dining rooms with restricted capacity. • While some restaurants inCanada andRussia remain temporarily closed, the markets plan to have substantially all restaurants operating on a limited basis by the end of June and July, respectively. International Developmental Licensed Markets: • Substantially all restaurants inChina andJapan are opened to serve
customers, with limited dining room capacity.
•
Accelerate Recovery Through Investments in Our System
In response to the outbreak of COVID-19, the Company has taken a number of
timely, targeted and temporary actions to provide franchisee financial liquidity
assistance, primarily through deferral of cash collection for certain rent and
royalties earned from franchisees in substantially all markets, enabling them to
continue supporting their workforces and serving their communities. In addition,
as previously announced on
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Advertising Contributions
Targeted Franchisee Financial Support
Delivery Support In a limited number of international markets, the Company is providing support for certain restaurants facing unique circumstances, such as those temporarily operating with a majority of their sales as delivery sales.
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THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS RELEASE Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic charges and gains, as well as income tax provision adjustments related to the Tax Cuts and Jobs Act of 2017, and bases incentive compensation plans on these results, because the Company believes this better represents underlying business trends. Comparable sales are compared to the same period in the prior year and represent sales at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters (which includes restaurants temporarily closed due to COVID-19 in 2020). Comparable sales exclude the impact of currency translation, and, since 2017, also exclude sales fromVenezuela due to its hyper-inflation. Management generally identifies hyper-inflationary markets as those markets whose cumulative inflation rate over a three-year period exceeds 100%. Management believes that these exclusions more accurately reflect the underlying business trends. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. The goal is to achieve a relatively balanced contribution from both guest counts and average check. Comparable guest counts represent the number of transactions at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. RELATED COMMUNICATIONSMcDonald's Corporation will broadcast an investor conference call withEvercore ISI over the Internet at10:00 a.m. (Central Time) onJune 16, 2020 . A link to the live webcast will be available at www.investor.mcdonalds.com. UPCOMING COMMUNICATIONS For important news and information regardingMcDonald's , including the timing of future investor conferences and earnings calls, visit the Investor Relations section of the Company's Internet home page at www.investor.mcdonalds.com.McDonald's uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information. ABOUTMcDONALD'S McDonald's is the world's leading global foodservice retailer with over 38,000 locations in over 100 countries. Approximately 93% ofMcDonald's restaurants worldwide are owned and operated by independent local business owners. FORWARD-LOOKING STATEMENTS This release contains certain forward-looking statements, including statements regarding the impacts that the COVID-19 pandemic and our responses thereto may have on our future operations, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from our expectations are detailed in the Company's filings with theSecurities and Exchange Commission , including the risk factors discussed in the Company's annual and quarterly filings. The Company undertakes no obligation to update such forward-looking statements, except as may otherwise be required by law. 4
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