McDonalds 1Q15 Earnings Call Notes

Separate call on May 4 to go over turnaround

“we have scheduled a separate call on May 4 to share the initial details of our turnaround plan. We appreciate your patience, as we focus today on our first quarter results and the overall approach we are taking as we develop plans to reenergize the business.”

France, Russia and US remain challenging

“the U.S., France, Russia and Japan, where challenges persist. U.S. results remain disappointing. Recent actions taken by Mike and his leadership team, including implementing a more efficient operating structure, simplifying the menu and holding the U.S. Turnaround Summit with operators in March, are helping to create a renewed sense of energy and focus around better delivery of local customer needs.

In both, France and Russia, consumer confidence remains low and challenging macroeconomic conditions continue to negatively impact results. ‘

CEO’s operating principles

“Let me shift gears now and discuss the approach I am taking to lead McDonald’s into the future. My operating principles, if you will. First is a greater emphasis on personal accountability. I am honest and fair if I don’t dispense forced kindness. Where we need to fix the fundamentals, we need to act now; and where we need to make an impact, I’m not looking for incremental steps.”

“second operating principle is grounded in the customer. As a retail business we must be even more customer-centric. This means deeper understanding, better listening, better segmentation, genuine sharp insights regarding what our customers want”

“My third philosophy is progress over perfection. We will try new things, move fast with what works and even faster from what doesn’t. And when we find winning plays, we’ll be more nimble, much like we did with the rollout of Apple Pay this last fall, from first contact to going live to 12 weeks.”

“My final approach to leading is I champion simplicity. We are simplifying for greater transparency, accountability and speed.”

Modern and progressive

“My overall vision is for McDonald’s to be seen as a modern, progressive burger company, delivering a contemporary customer experience. Modern is about getting the brand to where we need to be today, and progressive is about doing what it takes to be the McDonald’s, our customers will expect tomorrow.”

Stop using antibiotics that are “important to human medicines”

“we will stop using antibiotics that are important to human medicines, and are checking supply chain within the next two years. And there are plans to feature 100% sirloin burgers for a limited time in the U.S., along with a current test on all-day breakfast.”

Foreign currency translation impact results by 0.40-0.45 this year

“Based on current exchange rates, we now expect foreign currency translation to negatively impact our results by $0.13 to $0.14 in the second quarter and $0.40 to $0.45 for the full year. As usual, take this as directional guidance only, because rates will change, as we move throughout the year. ‘

Driving demand with new products and more local

“riving demand is going to be driven through both national and local menu news. So we have some strong and some exciting product pipelines ahead. So most recently we’ve announced the sirloin burger, which we believe will be a favorite with customers and have broad resonance. But also we are liberating the creativity, and I guess the insights of our local markets to develop local food menu items that better resonate with the local customer base. ”

We are moving from a world of mass marketing to mass personalization

“We are moving, without a doubt, from a world of mass marketing to one I describe as mass personalization. And clearly, technology allows us to do that now, which allows us to build a much more meaningful relationship with our customers, to shift from a transactional relationship into a far more engaging and meaningful, purposeful relationship where we can understand their needs on individual basis rather than a generic basis.”

This is a growth led turnaround

“this is around driving operating growth in our operating business. Simply put, we want to sell more hamburgers to more customers, more often, around the world. So this is going to be a growth-led turnaround. There are things we can do to help that.”

We are proud of our core products

“What we are working on now and what Mike and the menu team is working on is how could we deliver a better McDonald’s menu? So we are very proud of our core products. What can we do to enhance the quality, both direct quality, and also the quality perception as we develop new items. Again, our benchmark is ourselves. And our customers are guiding us on that. So we believe if we can bring great quality products at the value of McDonald’s that is the equation that will drive growth.”

I’m not new to most of McDonald’s system

“I am not new to most of the McDonald’s system. I am new in position. I totally recognize that. And different expectations and accountabilities come with that, but I think my track record and my history in McDonald’s is relatively well known around the place. And therefore, I don’t come as a complete surprise. So I look forward to sharing more on May 4 and ongoing.”