McDonald Earnings 2Q16 Call Notes

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McDonald’s (MCD) Stephen J. Easterbrook on Q2 2016 Results

The most recent customer satisfaction scores reflect improvements in seven of our nine largest markets

“Customers are noticing the steps we’re taking to build a better McDonald’s. The most recent customer satisfaction scores reflect improvements in seven of our nine largest markets. In the U.S., we are seeing further evidence of improved brand perceptions according to a recent YouGov report that measures consumer perceptions across 1,400 brands. McDonald’s was ranked fourth most improved brand across all brands measured, and the most improved within QSR.”

Recent softening of the IEO industry

“Beginning with the U.S., comparable sales for the second quarter increased 1.8%. Whilst modestly positive, this growth was not as strong as the last two quarters. This is due, in part, to the recent softening of the IEO industry, which experienced minimal growth for the trailing 12-month period ending in May at only 40 basis points”

We’re expanding our delivery business

“In addition, we’re expanding our delivery business by tapping into growing digital channels, as well as other vendors, to offer added convenience to Chinese customers.”

Kevin M. Ozan

80% of our global restaurants are franchised

“With more than 80% of our global restaurants franchised, the largest driver of operating income continues to be our franchise margins.”

Benefiting from favorable commodity costs but facing rising labor costs

“While we are benefiting from favorable commodity costs around the world, we are facing rising labor costs in many of our markets. As a result, we are carefully balancing price increases with a focus on maintaining our strong value proposition, which remains a key pillar of McDonald’s brand, to drive guest counts. In the U.S., second quarter pricing year-over-year was up about 3% compared with food away from home inflation of 2.6%.”