McDonald’s 3Q15 Earnings Call Notes

Our turnaround plan is working

“our turnaround plan is working. Customers are beginning to respond to the actions we are taking and this progress is reflected in our third quarter results”

Goal is simplification

“Our goal is net simplification. We have established screens to evaluate operational complexity versus the expected impact on the customer and the business. And ultimately, we want to focus our efforts on fewer, bigger decisions would generate bigger rewards. ”

+4% comps

“third quarter global comparable sales were up 4% reflecting positive comparable sales across all segments and positive guest counts in all segments except the U.S.”

All day breakfast has been a successful rollout

“we launched officially nationwide on October 6, and I would say the enthusiasm levels from customers and from our teams and the restaurants are high. It’s been a successful rollout.”

It’s been easier than people feared

” the operators have been really again infused at the fact that this has created. It’s been a lot smoother from an operational perspective than perhaps people had feared. ”

We are running better restaurants

“we are running better restaurants than we were a year ago. So if – and that is ultimately what customers respond to. And then as we innovate around the menu and have promotional activity and have fun with that, that would increment the sales, but running better restaurants day in and day out.”

We need a 2-3%+ comp to maintain margin. Commodities really aren’t the concern right now

“we generally need a 2% to 3% comp in the U.S. to maintain margins. With these additional labor costs, certainly the comp needed to maintain margins in the near-term would be higher than that. Commodities right now aren’t a big pressure on us. And so commodities really aren’t the concern. It’s more of a comp needed to kind of overcome these near-term labor costs.

Cultish appeal to breakfast in college towns, but you’ll see people eating breakfast mid afternoon too

“if you are in a college in town, you are seeing a lot, a lot of activity into the evenings and the overnights around breakfast items that is just cultish amongst the students, but you can go directional mid-afternoon to see a more mature group that we are sitting there who can now enjoy the product with Egg McMuffin mid-afternoon and having to watch – clock watching and try and make the 10:30 a.m. deadline.”

We’re focusing on food quality too but success is coming from focusing on day to day operations

“I don’t want to underestimate just the investments we are making in food quality. The investments that consumers care about such as the announcement to go to free range eggs, for example, such as the quality cues that you deliver with a buttermilk chicken. I mean, that is getting strong. But underpinning it and I will never ever move away from this, any market that’s successful around the world is because they are focusing on the day-to-day operation and just delivering at that moment of truth for the customer.”