McDonald’s, the fast-food giant, recently announced its Q4 results, which fell short of Wall Street’s expectations. While the company’s global same-store sales grew by 3.4%, it was lower than the anticipated 4.79% jump. Similarly, its US sales growth was 4.3%, below the expected 4.45% increase.
This performance is in contrast to the previous quarter, where McDonald’s saw an overall same-store sales increase of 8.8%, surpassing analyst estimates at the time. Despite falling short this time, the company reported adjusted earnings per share of $2.95, higher than the expected $2.82, and total revenue of $6.41 billion, an 8% jump.
For the fiscal year 2023, McDonald’s reported a total revenue of $25.49 billion, a 10% increase from $23.18 billion in 2022. CEO Chris Kempczinski acknowledged the current consumer environment and expressed confidence in the resilience of their business amid ongoing macro challenges.
Kempczinski also mentioned McDonald’s growth plan, “Accelerating the Arches,” which has contributed to over 30% of same-store sales growth since 2019. In the US, Q4 sales growth was driven by larger check sizes, increased menu prices, and successful marketing campaigns such as the return of the McNugget Buddies and Happy Meal Squishmallows. Overall, sales in the US for the full fiscal year jumped by 8.7%.
However, McDonald’s faced challenges in its international markets. In its international operated markets, same-store sales increased by 4.4%, down from the 12.6% growth seen a year ago. In international licensed markets like Latin America and Asia, same-store sales only grew by 0.7%, compared to a significant increase of 16.5% in Q4 2022. The company attributed this decline to the war in the Middle East, which affected sales in that segment.
McDonald’s loyalty program played a crucial role in its performance. In Q4, loyalty members generated $6 billion in sales across 50 markets, and over $20 billion across fiscal 2023, a 45% increase from the previous year.
Despite falling short of expectations, Wall Street analysts remain optimistic about McDonald’s future. Wedbush analyst Nick Setyan believes it is challenging to see McDonald’s not succeeding in any consumer environment. He expects sustained same-store sales growth driven by menu pricing, innovation, loyalty programs, effective marketing, and operational execution and efficiencies.
Similarly, Jefferies’ Andy Barish named McDonald’s a top pick for 2024, considering it the best defensive and offensive play in the restaurant industry. Barish anticipates further investments in digital platforms, delivery services, drive-throughs, and chicken products.
McDonald’s has been cooking up an ambitious growth plan. During its Investor Day in December, the company announced its goal to expand to 50,000 locations by 2027 and increase its loyalty program membership from 150 million to 250 million.
In conclusion, while McDonald’s Q4 results fell short of Wall Street’s expectations, the company remains confident in its business’s resilience. With successful marketing campaigns, a strong loyalty program, and plans for expansion and innovation, McDonald’s is poised for continued growth in the coming years.