Operations

McDonald’s back with a bang in Q1 2021

Provided

April 29, 2021

McDonald's is back in a big way, as the QSR behemoth posted positive results for Q1 2021, smashing analysts' expectations despite the pandemic's continuing impact on the QSR marketplace.

Quarterly comparable sales results were positive across all segments for the first quarter this year, ending March 31, 2021, as the company began to recover from the impact of COVID-19, despite guest counts remaining negative.

Sales rose 9% from $4.71 billion in Q1 2020 to $5.12 billion in Q1 2021, according to an earnings report.

Net income jumped 39% from $1.1 billion to $1.5 billion, driving GAAP earnings per share from $1.47 to $2.05 on a diluted basis. Non-GAAP EPS rose 31% from $1.47 to $1.92 on a diluted basis.

These results surpassed analysts' comparable sales expectations, as the chain's $5.12 billion in revenue beat analyst expectations by $80 million, according to Seeking Alpha, and the non-GAAP EPS of $1.92 beat expectations by 10 cents, while the GAAP EPS of $2.05 topped predictions by 24 cents.

Shares traded at $233.90 today against a 52-week range of $163.78 to $235.63.

"Our first quarter 2021 global comparable sales and revenues surpassed first quarter 2019 levels, even as resurgences and operating restrictions persist in many parts of the world," McDonald's President and CEO Chris Kempczinski said in a prepared statement. "I continue to be inspired by the resilience of our crew members, franchisees, suppliers and company employees as we lead with our values and stay true to our purpose of feeding and fostering communities.

"Our teams around the world are focused on executing our Accelerating the Arches strategy at the highest level — we're maximizing our marketing in a culturally relevant way, committed to the great-tasting customer favorites on our core menu and doubling down on digital, delivery and drive thru to create a faster and easier customer experience."

Sales for company-operated restaurants rose 7% from $2 billion in Q1 2020 to $2.16 billion in Q1 2021. Revenues for franchised restaurants jumped 10% from $2.6 billion to $2.87 billion in the period, while other revenues increased 6% from $80.6 million to $85.7 million.

In the U.S., comparable sales results benefited from average check growth, with double-digit positive comparable sales across all dayparts. The company's strong national menu and marketing offerings, as well as growth in delivery and digital platforms, contributed to the comparable sales growth.

Results in international markets reflected strong positive comparable sales in the U.K., Australia and Canada, partly offset by negative comparable sales in France and Germany. Comparable sales in many markets continued to be impacted by varying levels of government-imposed COVID-19 restrictions on restaurant operations.

Monthly comparable sales results in international developmental licensed markets improved throughout the quarter, primarily driven by China and Japan.

Results for the quarter reflected stronger operating performance in the U.S. due to higher sales-driven restaurant margins.

As a result of COVID-19 resurgences, throughout the quarter there have been numerous instances of government restrictions on restaurant operating hours, limited dine-in capacity and, in some cases, mandated dining room closures, particularly in international markets. These restrictions are impacting most of the company's markets across Europe, particularly those with fewer drive-thru restaurant locations. The company expects some restrictions in various markets as long as the pandemic continues.

The company had not released guidance for 2021 at the time of this report.