McDonald’s is having an “unhappy” sales report, but the fast food giant spots signs of hope
In a recent earnings report on Tuesday, McDonald’s has 30 percent lower sales when compared to last year’s same timeframe, falling to a revenue of $3.77 billion. The burger company’s net income has dramatically decreased by 68 percent to $438.8 million for the second quarter, a period of escalating health crisis not only in the country but also the rest of the world.
McDonald’s point to the outbreak. Their chief executive officer Chris Kempczinski stated during the earnings call: “In many markets around the world, most notably in the US, the public health situation appears to be worsening.”
Lowering the drop in sales
Though on the surface the drop in sales may seem bad, looking closely and there are actually positive figures, as noted by CNN Business. The publication cited some example of same store sales in the US. On April, as the pandemic is just beginning and businesses were shocked by this abrupt disruption, sales for McDonald’s was 19.2 percent lower compared to the previous year. Then the decrease in sales continue to slow, in which May saw only a 5.1 percent decrease from last year, and June with only 2.3 percent lower sales from last year.
Chief financial officer for McDonald’s Kevin Ozan is expecting an upward trend, seeing better sales this month, albeit “slightly positive.” And Kempczinski also remained hopeful, further adding, “Nonetheless, I believe that [the second quarter] represents the trough in our performance as McDonald’s has learned to adjust our operations to this new environment.”
The bleak figure may come from stores outside the US, with sales not really healing as much as the stores in the American soil, although notably there are signs of recovery still. Global same store sales for the month of April has decreased by 39 percent from last year’s same period, May saw a drop of 21 percent, and over 12 percent on June.
— Restaurant News (@NRNonline) July 28, 2020
One weak point for McDonald’s before the pandemic hit was Breakfast, in which it only “continues to be disproportionately impacted by disruptions to commuting routines,” according to their CEO. However, their drive-thru and delivery segments are actually helping their sales by much, as these options are much preferred with the coronavirus still on the loose. They still plan on further promoting the Breakfast sometime this year.
The pandemic has also pushed the company to close hundreds of their stores across the country, which was supposedly planned for the future. 200 McDonald’s store will permanently cease operations, many of which are “low-volume restaurants” in Walmart premises. The fast food company is also planning to divest ownership in its Japan business.
According to Kempczinski, “Within a matter of weeks, the McDonald’s system made operational modifications across 30,000 restaurants, while closing and then reopening another 9,000 restaurants.” He also added that the company has also issued “new safety procedures” across all their stores and established new ways of serving customers in a “contactless” manner.