The world’s largest burger chain will start betting on revamped stores.
The world’s largest burger chain published its most recent quarterly earnings and reported that company stock rose 15% over the last 12 months, as of Tuesday’s close (January 28th), beating estimates of Wall Streets experts who anticipated hard times amid declining foot traffic in its U.S. restaurants and a change in leadership after the company fired its board fired CEO Steve Easterbrook in November. Chris Kempczinski, who formerly led the company’s U.S. division, was tapped to replace him.
In the United States, its home market, same-store sales climbed 5.1% during the quarter, despite traffic to restaurants falling by 1.9% in 2019.
“Getting U.S. guest count to positive is our number one priority,” said CEO Chris Kempczinski, adding that the focus will be winning over breakfast customers.
Based on a survey of analysts by Refinitiv, published by CNBC, here’s what the company reported compared with what Wall Street was expecting:
- Earnings per share: $1.97, adjusted, vs $1.96 expected
- Revenue: $5.3 billion vs $5.3 billion expected
- Global same-store sales: 5.9% vs 5.2% expected
This somewhat “unexpected” growth for the burger emporium has come not just by enhancing its menus, schedules, and options, but with the growing trend of digitizing stores, drive-thru menus, and partnering with new delivery options.
Since 2018, faced with growing competition, McDonald’s looked towards AI-powered technology to stand out. According to Hospitality Tech, over 4,000 restaurants have converted to the fast food giant’s “Experience of the Future” concept that combines state-of-the-art technology, including digital menu boards and self-ordering kiosks with an updated look and delivery.
In 2019, the company made its largest acquisition in 20 years in March when it acquired personalization tech startup Dynamic Yield for an estimated $300 million, reports RT Insights. As of September 2019, the technology was deployed in over 8,000 US restaurants and was expected to be implemented in “nearly all” drive-thrus in the United States and Australia by the end of 2019.
The China dilemma
McDonald’s has shut down restaurants in five Chinese cities, beginning even to implement new health protocols in the region as the coronavirus has expanded worldwide and caused fear among markets.
The restaurante chain, in 2017, handed over the reins to a Chinese state-owned enterprise, in a deal that would value the business at as much as $2.08 billion, according to The Wall Street Journal, however, it is yet to report if further damage is anticipated for the burger giant. McDonald’s still has about 3,000 restaurants open in China.