The sign outside a McDonald's restaurant in Pittsburgh, Pa., on June 25, 2019.Gene J. Puskar/The Associated Press
McDonald’s Corp. MCD-N missed revenue and profit expectations in the fourth quarter, as higher costs and tepid sales in its over 4,500 restaurants in Australia and China owing to pandemic-led curbs ate into gains from growth in the United States.
Operating costs rose 14 per cent to US$3.61-billion as supply-chain bottlenecks led the world’s largest burger chain to spend more for ingredients such as chicken and beef, as well as packaging material.
U.S. food and paper costs rose 4 per cent in 2021 – a level the company expects to roughly double in 2022, it said.
“A surge in COVID-19 cases and a return of restrictions in many of our markets are creating uncertainty around the world, exacerbating labour shortages and supply-chain delays,” chief executive officer Chris Kempczinski said on an earnings call Thursday.
In the United States, the company’s biggest market, about 20 per cent of restaurants have shuttered seating areas because of staff shortages or local COVID-19 outbreaks, and about 1 per cent of U.S. stores are operating with reduced hours.
On a per-share basis, McDonald’s earned US$2.23, missing analysts’ average estimate of US$2.34.
Sales in China contracted after some cities banned dining in restaurants to control fresh pandemic outbreaks ahead of the February Winter Olympics. In Australia, sales growth remained muted compared with a year earlier.
However, the Chicago-based chain’s U.S. same-store sales increased 7.5 per cent compared with analysts’ estimate of a 6.8-per-cent rise, thanks to the launch of special menu items such as McRib, celebrity promotions, loyalty program-driven growth in digital sales and menu price increases of about 6 per cent in 2021.
Sales growth in Italy, Germany, France and the United Kingdom also helped boost global revenue by 13 per cent to US$6.01-billion in the three months ending Dec. 31, just shy of a market expectation of US$6.03-billion, according to Refinitiv data.
Global same-store sales jumped 12.3 per cent, compared with Wall Street estimates of a 10.73-per-cent rise.
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