Business did improve for McDonald’s throughout the second quarter as restrictions lifted across the globe, but the fast food giant faces a bumpy — and expensive — recovery.
Of the chain’s 39,000 restaurants worldwide, 96 per cent are now open, compared with 75 per cent at the start of the second quarter. Comparable-store sales that were down 39 per cent in April were down only 12 per cent by June.
The recovery is uneven, however. In some markets, like Australia and Japan, sales are already running ahead of 2019. In China, sales are down. In the U.S., McDonald’s put on the brakes. After reopening 2,000 dining rooms with reduced seating, the company paused reopenings in early July as coronavirus cases spiked. Last week, McDonald’s said it will delay dining room reopenings for at least another month and will require face masks for anyone entering its restaurants.
McDonald’s is also spending heavily to convince people to come back, particularly for breakfast. The Chicago company spent more than $200 million to support franchisee marketing during the second quarter. It also paid $31 million to distribution centres — payments normally made by franchisees — and $45 million to cover franchisees’ debts.
McDonald’s reported Tuesday that net income fell 68 per cent to $484 million during the quarter. Earnings, adjusted for one-time items, were 66 cents per share, well short of the 74 cents Wall Street was looking for, according to a survey by FactSet.
Same-store sales fell 24 per cent for the entire quarter, a point shy of analyst projections. In the U.S., McDonald’s biggest market, same-store sales fell 9 per cent. Last year, they were up 8 per cent in the same period. Same-store sales fell 41 per cent in international markets, reflecting temporary store closures in the United Kingdom, France and other countries.
Revenue fell 30 per cent to $3.76 billion, slightly ahead of expectations.
McDonald’s shares fell 2 per cent to $196.52 in premarket trading.
By The Associated Press