McDonald’s utilizing the advantages of the global system
McDonald’s Corp.’s chief executive officer Christopher J. Kempczinski stated that although the global coronavirus (COVID-19) outbreak has “significantly disrupted” business operations, the fast-food restaurant chain is leveraging the advantages of its global system to weather the storm and set itself up for long-term growth.
In a business update on April 8, Mr. Kempczinski stated, “Although the disruption means our business is faced with immediate challenges, we believe our agility has positioned us well to adapt and continue to serve customers where it is safe to do so.” Around 75% of our restaurants are open and running worldwide; most of them have changed to concentrate on drive-thru, delivery, and/or takeout business. We take pride in McDonald’s significant contribution to providing accessible, reasonably priced food for people who must continue working during this period, such as healthcare professionals and other vital workers. I have the utmost gratitude for our staff members who are securely meeting that need in their neighborhoods.
According to Mr. Kempczinski, McDonald’s global comparable sales in January and February were good in the majority of nations; however, starting in mid-March, the business saw a notable drop in performance that differed by region.
“The discrepancy is indicative of varying consumer behavior patterns and governmental reactions,” he stated. “At this point, it is not possible to estimate the full extent of the impact on our business due to the fluidity of the situation and the ongoing evolution of the duration and scope of COVID-19.”
Globally, comparable sales increased 7.2% in the first two months of 2020, with an 8.1% increase in the US. However, US comparable sales decreased by more than 13% in March, while worldwide comparable sales fell by 22%.
As of April 8, 99 percent of McDonald’s restaurants in the US had drive-thru, delivery, or takeout options, with dining rooms available at certain locations at the restaurant’s discretion. According to the corporation, the restaurants that have shuttered were mostly forced to close because of their locations (such as distinctive areas like malls).
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In contrast, just 45% of eateries are open in the worldwide markets served by McDonald’s. While some markets, like France, Italy, Spain, and the United Kingdom, have completely shuttered all of their restaurants, others, including Australia, Canada, Germany, and Russia, only operate a restricted number of locations.
As of April 8, McDonald’s claimed that over 75% of its locations across the globe were open for business.
Mr. Kempczinski stated, “There will be more challenges and tough business decisions to be made.” “We don’t take our tenacity for granted, but we also don’t become comfortable. We continue to concentrate on the things we can handle to get through this crisis. In order to maintain our financial flexibility, we have made significant moves, such as stopping our share repurchase program and boosting our cash position by obtaining $6.5 billion in the first quarter from the debt markets.
Additionally, because there are fewer “Experience of the Future” initiatives in the US and fewer new restaurant openings in the majority of global regions this year, we will be cutting back on capital expenditures.
“Our top goals continue to be protecting our customers’ and employees’ health and safety, keeping our financial flexibility, upholding discipline, and helping our communities when it is safe to do so. We will have a long-term perspective as we work through this extraordinary crisis to best position ourselves going forward.