News

McDonald's CEO: Q1 results prove brand 'becoming a better McDonald's'

April 30, 2018

McDonald's efforts to re-imagine itself to the liking of today's customers appears to be working, judging from Q1 results that featured a 5.5 increase in global comparable sales, with guest counts increasing 0.8 percent. President and CEO Steve Easterbrook said in a news release those kind of results show customers are noticing this brand is getting better. 

"We continued to build upon the broad-based momentum of our business, marking 11 consecutive quarters of positive comparable sales and our fifth consecutive quarter of positive guest counts," Easterbrook said in the release. "More customers are recognizing that we are becoming a better McDonald's, appreciating our great tasting food, fast and friendly service and compelling value as we execute our Velocity Growth Plan."

First quarter highlights from the Oakbrook, Illinois-based brand included: 

•    Systemwide sales grew 7 percent in constant currencies.
•    Diluted earnings per share grew 12 percent in constant currencies to $1.72.
•    Consolidated revenues fell 15 percent in constant currencies, as a result of strategic refranchising initiative.

The brand also said that consolidated operating income remained flat in constant currencies due to growth in franchised margin dollars, offset by the impact of that refranchising initiative. Likewise, the diluted EPS reflects $0.07 per share of additional income tax expense. 

The company said this is associated with adjustments to the provisional amounts recorded in December 2017 under the Tax Cuts and Jobs Act of 2017. Excluding this impact, diluted earnings per share grew 16 percent in constant currencies to $1.79. The company also returned $2.5 billion to shareholders through share repurchases and dividends.

In the U.S., first quarter comparable sales increased 2.9 percent, driven by growth in average check size, resulting from menu price increases and product mix shifts. Operating income for the quarter increased 5 percent, reflecting higher franchised margin dollars and higher gains on sales of restaurant businesses, partly offset by lower company-operated margin dollars.

Comparable sales for the International Lead segment increased 7.8 percent for the quarter, reflecting positive results across all markets, primarily driven by the U.K. and Germany. The segment's operating income increased 9 percent in constant currencies, fueled by sales-driven improvements in franchised margin dollars.

In the High Growth segment, first quarter comparable sales increased 4.7 percent, led by strong performance in China and Italy and positive results across most of the segment, partly offset by continued challenges in South Korea. Foundational markets Q1 comparable sales rose 8.7 percent, reflecting positive sales performance across all geographic regions.

"We're keeping the customer at the center of everything we do as we continue enhancing their McDonald's experience," Easterbrook said. "Guided by our Velocity Growth Plan, we are satisfying the rising expectations customers have for the taste and quality of our food and greater convenience as they visit our restaurants or enjoy meals delivered to their homes and offices. We are confident in the strategies guiding our business for today and for long-term sustained growth into the future."