MCD - Earnings call transcript Q1 2022

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Operator

Hello and welcome to McDonald's First Quarter 2022 Investor Conference Call. At the request of McDonald's Corporation this conference is being recorded.

Following today’s presentation, there will be a question-and-answer session for investors. [Operator Instructions] I would now like to turn the conference over to Mr. Mike Cieplak, Investor Relations Officer for McDonald's Corporation. Mr. begin. may you Cieplak

Mike Cieplak

and call for Chief today and Kevin Chris everyone, me Executive us. on Kempczinski; Ozan. Officer Financial the are Chief thank morning, joining you With Officer, Good President and

their statements forward-looking apply measures reconciliations of GAAP of as also comments corresponding those the reminder are our along on a in earnings today's on X-K to today. release call the financial are available any mentioned our call on documents non-GAAP filing and Both with measures. website As our

Following this Please we the Chris. take limit turn replay questions. webcast will yourself any for our reenter recorded being Today's via for I'll prepared it and and website. morning over remarks being now your is call is to to questions. one queue also additional question And

Chris Kempczinski

A I suppliers good future how global excitement to members our company can XX,XXX pride McDonald's. has few further overwhelming. was for the all, together ago and we've brand This how more recovery forward been coming Through been and of optimism bringing coupled of to world around with our message monitor are our teams, teams of quarter. QX. never more I strength visit our of a our in and developments to built go better market meet the to privilege we years. in-person they Mike, reaffirmed I'm convention continue see ahead. morning, McDonald's the continuing senior our and momentum restaurant with the it to much in Though months had been years pandemic, to in and the we on strong road leadership be we've a look our in to welcoming of brand person. that international franchisees, united XXXX how team of from position weeks series in pleased as restaurant the part on Thanks the on and four hear in and markets the has worldwide strategy We from in come together a there in share we to The far to in convention life entered singular in than visits was around see celebrated sense restaurants. proud to clear that first time employees latest McDonald's family, to first everyone. teams participated

It ambition to to brand. ability we as of our the teams the and strategic our customer labor build the they're have This external work customers. issues, starts a will In protect, with and and brand fact people. our to more of to of for provides within we as executing deliver our few historic raise inflation, is execution like in our career formula. next formula growth. in our weather in maximize care. to times creating We we're backdrop. been past up power ongoing experience, backed macro regardless believe McDonald's winning a during want dialing what's whether Staying Equally increasingly value or for where the a the turn our the the planning invest power an our to holistic together. we show environment, driving on of side they to challenging plan. McDonald's resiliency plan the develop resurgences. COVID us, chain care unpredictable brand impact There model to and our macro proposition. By is to they complex growth supply that always take skills drive to of of same The we control our and years important our enable environment future employee of our on focusing demonstrated and the show building of a pressures this unprecedented commitment great restaurant with consumer especially people is is and availability looking well-positioned type the In culture the jobs It's continue unequaled create people care, legendary us by our chapter can work an to more has the

Before the I acknowledge who of uncertainty been this the hearts crisis around Kevin, historic and do all to to that it want with and minds over have impacted Ukrainian new has I communities to by our turn world. elements people that brought are

in in is the far and an But analyzing to Ukraine need. With ever-evolving from it's and pay provide crisis situation, additional this second both employees our support stakeholders investors that provide and of continued closed. countries, them In remain others in later clear, options than Russia end are expect and restaurants to Our we to no have clear to quarter. and over. we other direction the

to, through walk QX Kevin performance. to over us Now our

Kevin Ozan

comp also unit of entered gains throughout comp Thanks the markets, still recovery nearly brand, first to digital XXXX. channels accelerating average international-operated core The In XXXX extremely experiencing segments. like reflecting the markets starts and strongest digital were strong and now our across My app Rewards pre-pandemic in strong equities of Welcome digital Australia, March make by launch first their fueled successful was markets. momentum to the continued campaign strong convenience one and growth be Loyalty. sales U.K. share segment. and the elevating the in In on performing menu Chris. we Global major all Mac chicken our we a quarter, by levels promotion. delivery. over our our the performance most be performance IOM quarter of COVID-related rollout Big and fourth expecting initiatives volumes quarter sustained consumers' it building the successful stops QSR of McPlant sustained continues XX% underlying already lives several up Canada and have drive across MyMcDonald's in our as Chicken In segment in World in increased first and national significant U.K. surpassed beef. to of the how XX% showcased And traffic sales increased easier quarter, consumers. launch In of our among We in gains experienced showcasing has the were helped year markets adoption of share

McDonald's Over the launch and in of menu our We years, successful was mobility challenged a quarter. in France our particularly improvement saw core past platform both in the Germany. premium new great Germany, markets, but couple highlighted in the markets of we throughout consumer France and both with campaign QPC Supreme, in beef

more mentioned, brought rising inflationary Ukraine. As pressures were quarter macroeconomic all challenges the also which challenges, by including supply and in the elevated crisis chain Chris of

closed end of were made March in at the All of restaurants our we February. decision to suspend early Russia. in the And operations Ukraine in

and digital Chicken average closures price across on first these X% increases adoption. X.X% to sales sales negligible in While for incremental the quarter. driven sales be XXXX, had represented check by to Crispy U.S., loyalty, impact drive campaigns and this and Higher a continued a our strategic system-wide driver of comp for the the results first quarter bundles continued consolidated delivered were the significant about strong markets value sales Sandwich growth year. In marketing

in sales levels, Japan, by partly and positive offset of focused developmental In comps Latin to as international market XX% share. consumer shifting grow comps the channels driven on and nearly Comp America, up largely license needs elevated to in negative by China. for off-premise a markets. quarter COVID Japan Turning result we were continuing the meeting

the dinner operating launch closures daypart Nuggets. at of growth the also a the like resulting renewed in with temporary strong in COVID the Spicy We challenging of cases and quarter, delivered in Chicken in re-hit the time Mac offerings created conditions Samurai continue And restrictions country today. and China, that restaurant throughout limited government surge the

digital-only While app we comps I'll back including cards. offers the our to subscription that, negative and with And quarter, expanded with it delivery promotions turn were for Chris. engagement

Chris Kempczinski

Kevin. the speak work like, took past and they for it's we're digital front over and digital, By doubling led on the efforts drive-thru, than they in for Knowing ways on digital, reach critical to screen us. which top of a We at world relationships Those down our quarter. of and delivery the sales delivery customers a equates maximizing center. piece through make to customer find This U.S. want themselves. with mobile customers. up six Accelerating what opportunity our it, we all are restaurant of in the XDs our personalized. markets, doubling a emerging committing with the we digital the marketing, XX% the down year. power where of they XDs our in and together more MCDs, seeing the focus and sales drive-thru. and McDonald's menu nearly it, particular of our the first the they customer the over like be changing In Thanks more can our application, on smartphone, Arches XX% results in include the where $X they in The when store first After quarter. look alone of seamless and are our new experience stronger made delivery building we in kiosks Back digital at were a is MCDs a system-wide tremendous when growth sales, a core the continue needs plan to and pandemic. all strategy, our strategic their billion did Digital to of how hard to us insights the our XXXX,

loyalty introduced year. are relationships. expectations. many drivers million the we months U.S. participation to in just We're customers' authentic France, loyalty for meet with. biggest XX will U.S., and are had the there members seeing nine Germany this than the of more customers, more It's loyal into visits XX and MyMcDonald's in more year, Australia program this Enrollment Canada. Coming live in needs later helping whom One launched March, of just our and Rewards. from digital also better instance, loyalty After global rewards. personal is Rewards adoption we build the over MyMcDonald's and were U.K. our of us begin including as markets, earning frequent go exceeding very our

in These In customers. capability we continue visit convenience McDonald's the for global get learn is channel delivery world. to. bringing usage partnership on addition crave how coupled with customers us become Uber are is than DoorDash directly eager program memorable global loyal the made to continue plan growth and return and app our seen We more year. have the This MyMcDonald's business rooms delivery with customers share the to Australia create can largest back the by we they later half In even McDelivery key for expanding data At so Rewards let the from our up experience about the can make customer control our ordering U.K. delivery usage personalized kiosk loyalty in ultimately as service. the that partnerships a coming more US, QSR the driven that same restaurant to results delivery as dining and experiences. announced become they UK, Eats support QX, of to online partnerships now promotions. record exclusive the Canada markets. order of of kind in will order to the to the sales And the Just global We year. kiosk Some has and seamless a Europe's our allow frequency and markets largest and our us Those to our more food this last accustomed capabilities Eat us announced time, they in-restaurant McDelivery app. Germany, France the better Australia, customers recently and most sales to customers of Takeaway, expand This largest

already to the we're our customers. elevating provide and innovate. by of strong creative Finally, around to continues building media routines to enhance dialogue simple our go-to what order. And strength already special to into to the and risk-taking life rituals which Fan harnessed created US memories Orders that brought connection. about love them. unparalleled affinity because convenience with opportunities our as locations with Truth world to connections unlocked the a this so further iconic customer tapping our first their everyone competitive XX,XXX-plus the social common The our make powerful customers that truth are brand, Famous to has our reestablished It of drive-thru our us this fans celebrating brand

because our And promotion already Fan to complexity concept world. menu the moments love prime added of is quarter items operations. Truth hacks the our we food Bowl Truth and how connection. something people all life Super promotions to restaurant and identify find existing commercial no and examples transform This drive cultural were conversation into these and over coming there's of Fan feature core The menu to can

with in the the China celebrity Sandwich. McSpicy activated quarter local And This launch their successfully Chicken the to Famous Famous Order plans featuring Australia their Orders second platform quarter. own own

of Our heart food is brand. customers' the our relationship at with

our fact be our for accounts That's with menu our innovative to majority growth. our In core business continue large we and the classics. of why

these blend This quarter we in In of we than innovative XXX and line core, drove significant and alone, extensions. through sales great we Australia extensions featured XXXX a across to simple core more while growth. celebrate Ice results line new McCafe continue with Coffee globe keeping things our the ran

of millions market's a first Australia and the food as lifts selling more offer time they line to in Mac the most limited offer. reminds And These Big like truth Bacon meaningful love nothing Mac Mac us deserve total Sweden quarter items sandwiches they extensions the our a nothing feature offer saw in reminds weeks. top-line it should menu This Big became UK the customers our products why successful as Big Mac there less. consist simple a ever it quickly time as of beloved of news promotion only and the sold Mac. of Big our Big limited be on fresh two and introduced Chicken drive that growth core core

is menu taste exactly preferences, it happening in successful across new beginning changing pilot in McPlant. restaurants customer to and in introduced Ireland. satisfy the UK with now which January, available also a we've what's the UK After we course, Of made all innovations and

customers getting are is better them. When confident for can limit be collective to before future. As we've ingenuity more past even collaboration and what systems and excited quarter and this by our the together ready ready for we'll our there I've we of when made we McPlant, in said together. curiosity leverage are progress We're service achieve no

back Now it turn I'll to Kevin.

Kevin Ozan

Thanks.

resisted dollars in our adjusted $XXX for reflecting international This share in higher landlords costs or Our It earnings an to primarily of for of in are strong excludes matter. performance, quarter tax of for operating Total $XXX excludes by the in closed. XX.X%, reserve margin partially and million increase quarter in currencies. currencies, margins. Russia sales the the XX% costs. grew about related an per also suppliers settlement million $XXX was potential employees, and Adjusted performance while by margin G&A non-operating to restaurants by over a of for improvement million improved constant $X.XX, quarter, Ukraine constant franchise over offset restaurant XX% for driven expense

showed IOM year, the across the prior reflecting in margin franchise segment Our sales markets. recovery significant performance strong over

commodity operating company margins hampered and As by expected, labor significant our were inflation.

worldwide we And Given for higher depreciation was long-term our earlier about and continue restaurant convention tax quarter our the in Based year. FX EPS performance-based conditions, inflationary incurred currencies, XX.X% elevated on due to by quarter. technology. quarter $X.XX month, macroeconomic compensation $X.XX. to $X.XX expect and adjusted was reduce for EPS for G&A higher rates, pressures up these full expect XX% to throughout constant effective investments to year in rate about costs we this exchange second this to the to current related $X.XX by

as change the to we back And directional close. is will I'll to year. turn now, it guidance move this only, rates likely always, as As through Chris

Chris Kempczinski

legacy customers places At favorite busy employers food their for after leaving to featured of their hearts They’re whole know communities. than their We people, selves franchisee treating they're choice, to They're well. can our force destinations and doing work more serving where their magic restaurants customers put people local we bring local into where good. and convention, franchisee a in whole a begins. delicious that are for

as COVID-XX who brand core in treat choices choices. them, how industry We we transformed they and The that industry, fundamental think how come people have including an weigh treat endless it's the so in first these no most we have seemingly valuable in has ours, first to world. about value. the after we is customers. people are our the It's that industry, career that our people front shapes the How of how our belief very directly secret because brand people a they best life including

company-owned to around reaffirmed among restaurants a employees women designed in we XXXX groups. implementing years, by bench and strides few create representation US, us the McDonald's we and historically were made Crew, world. standards, as culture of the which and Thank commitment its convention customers and last both that it we created a Golden the make You that’s psychological allowing we throughout and responders our to physical to initiative global lot equity, our is talent at announced up our a as pay and gender from at McDonald's year, in first So progress called had raising in deep started global to for the leadership US, restaurants building including brand for pandemic. support wages well-known the we we progress experience, gaps, our as new announced create on week of Last We've for the safety the a is in teachers past underrepresented concept employee increased And to of have Arches. closing to

shining. to is it the developing opportunities. been attracting, success or other never best has used McDonald's people to managers and more we're customers who submit central turning inviting teams, keep but McDonald's participate them above the that where go sees for well and We're typical who instances see to harder work today. retaining to crew Now as restaurant and The challenges Fred duties. the tables their to than always say support has of arches Turner asking our beyond mission-critical been

we raise to continue with ways we'll will As shape people that in begin accelerate McDonald's this their achieve potential. full that to we and the our work And opportunity help Arches, ambition and Q&A.

Mike Cieplak

[Operator Instructions] David question, your Tarantino please.

David Tarantino

morning. seen My terms in wondering Chris operations there. spillover about was if effects question, the on since Russia-Ukraine good Thank know the you. necessarily I comment began what you you region? the consumer markets I been But those you've in not more what in Europe And Hi, is of behavior, incident in Europe have broadly. situation might could the broader paused

Chris Kempczinski

Sure. Thanks, David.

results, markets, growth our UK great saw the markets Europe. know international France performed our strongly you very Germany large as it in in QX. think from business in We many during the in Europe I and particularly of

So I results would didn't significant a impact say that we QX on based on see it.

think I up obviously we're concern around in showing what's Europe is but most performance seeing it's And on. sentiment. in you're consumer is certainly an eye something keeping mind it's around sentiment probably not business on everybody's yet what pronounced but

Mike Cieplak

Our next Palmer question is from Evercore. David with

David Palmer

feeling date I you your And could in than in or faster markets you characterize Thanks. the you or anticipate could pre-COVID to wondering in these path versus based back the countries? if was the of levels speak to any do others percent coming back what to seeing? traffic IOM recovery Thanks. your general back to about perhaps – levels is what these Perhaps sales? you're on pre-COVID

Kevin Ozan

– this really quarter. Europe, markets, levels. through certainly year David. Thanks, back as we've expecting their to came And large seen would XXXX We as that recover and fully our our Canada IOM first primarily Australia Yes. well into that

as levels. through of had big really, now all And talked couple really UK of surpassed doing all Canada, XXXX well we've and before pandemic. Australia, markets been sales those the So their them like five have

Germany. year. of of really the more those had lack I their France kind they The continuing so countries were two that were first strong markets mobility strong this And And both in quarter impacted consumer for performance of and performance. from think just

good So levels. markets, well at of we being XXXX as the et the those the to about all as Spains, as markets least Italy's, as feel even far of tier next cetera recovered

from consumer performance about everything earlier of just with concern seen and some because et that inflation there the Chris' But sentiment feel we've on crisis is a segment. and I the think European cetera. business between of good to our question those going Russia-Ukraine good on really point markets,

Mike Cieplak

Our next from question UBS. with Geiger Dennis is

Dennis Geiger

the maybe if you could the are how of what well talk you're in And late? you in your spending Great. Thanks currently could in US if if customer changed at you're Thank for brand Have you periods? maybe positioned relative from using or kind little the question. Wondering done menu? how environment particular. consumer in just all tie rolls consumers seeing more to a how of And think behaviors the the over you. you've about historical just bit well and

Chris Kempczinski

how I'll with we add how and can start and pleased Kevin performed into with Sure. QX. QX, But were on. think also with we're that we then I in entering happy we're

overall business us exceeded about A in performance. as our which So driving growth our the and our which we is for thing has think big US I us success for feel digital, US, good the expectations.

ordering And and Digital our that brand, reopened preferred delivery So, other we then a around consumers we part the world feel what's we're changed, remain and which US the elevated. it's in two into maybe really one really we've trade seen We breaking geographies feel have digital. To we're interacting on But – changed, certain I that a eye And about, good think come I are see seeing average bit on down good in and about that splintering despite delivery we and overall bit the good of delivery just then the some also kind you to that keeping thing that a good the of QX. with keeping that a previously getting seeing on we've to an consistent seeing also in for start what certain down the growing in is those things an chicken what we're changed significant seeing the I'll also markets the continues of there perhaps your that, transaction. about there. might little be little reopening in were going with about was as check growing groups business means to heading not be feel elsewhere a we're is into performance are and and growth business. eye think you're of hasn't is that's transaction, large which only seen parts with about still that point highly confident up pandemic business continues is out delivery. where what's continuing of

Kevin Ozan

that on watch Yeah. I'd sure good. lower-end definitely know consumers. close inflation. home consumer other has now, the what's But home. food right even The are thing, we're mobility. probably providing keeping There's make just business our no consumer But helpful is right us are only say things the concerned value is our from more you and I doubt that's increasing a lower-end and to think consumers as and of And is about still that. is important pretty gas They're mobility for is about food Consumers about away than still one at right we certainly energy worried to now -- even been prices.

that's been little also. benefit probably So a

Mike Cieplak

Glass Morgan next question from John Stanley. is Our with

John Glass

much. very Thanks

consumer talked understanding And your First, think traffic that being but inflation way of but the transactions Kevin, stands to kind might that or know is hard you is you of think you both cetera, and a talk key think out the down talk look about update in be measure, we where the U.S. pricing can be item you pricing about now? number there to to for the running now the growth markets? How at just you us should to in up? the reasonable but you et maybe U.S., digital thing business comp light measure health still And is in a on, pressures, where of may going labor can is delivery of I -- going counts about in your you looked qualitatively kind fact well, if inflationary might commodities you transaction year-over-year? like backed

Kevin Ozan

Sure.

that, all cover for a a and to try talk give minutes. next me of not XX shot and of little try I'll Let the to

X% That U.S., quarter, is be So U.S. I the for that roughly were let up year. last number the inflation. I the me with commodities XX% start thought to In we mentioned so for like going XX% to more now think or

have Obviously, So U.S. estimate. the is pretty clearly current our landscape risen. rapidly. commodities That's changing

certainly was to percent we'll that doubled close and need quarter that, U.S. substantially. now XX% XX% to keep more eye that to I similar in markets that think, kind IOM a is around last six-or-so number, that's Similarly, of increased on So but our the range.

inflation So the Russia-Ukraine food the has reasons side, and definitely various substantially increased for including crisis. commodity paper

right lapped it's side, mid-year U.S., in the we wages On the year, made haven't our of adjustments Part probably is in labor XX% so over our we restaurants you'll that to that. now. because last recall that company-owned

so take let try year. that's will through inflation. -- on the So first part be roughly -- of is first If it me Again, over quarter now it up pricing year our that X%. But of wage talking continued walk to and understand quarter dynamics the and to them you is due and of numbers. all about. so price help quarter last the part is some rough just U.S. due to were first pricing this in the up year-over-year, Right is these our round as numbers, I

We we're seeing flow-through are pricing still similar comp. our taking to the from

consumer from of resistance any from we standpoint, kind in substantial resistant this So pricing. increase haven't a seen

is flow-through roughly Again, science, that roughly but so. exact So XX% an not XX%. or

on we're sales. higher Those lower per just is mix pricing, mentioned So that X.X%. are little from bit still and that's of check or sizes bit seeing smaller much to Those with little order let's X.X% then items that comp transaction trade bit if a we're a increase Chris little pricing average roughly it hitting of impacts two sizes. around year-over-year say, our you're a flow-through, you a about gets X% pre-COVID. a XX% product seeing take down basis, order our than But lower. in

piece So quarter X.X% me pricing down around obviously transactions. then is sales X.X%. The the to of overall in lower that little down X% is gets gives or is bit items last of X.X% first trade me bit to from little were X.X% taking which counts Those by a comp guest of you roughly about X.X%. our

different So, lay out us that's quarter changing year. lot this But kind going the hopefully going dynamics roughly of on. that things way are pieces a the the I complex that got business performed of of first helps a on. lot

Mike Cieplak

Cowen. next is from Our with question Charles Andrew

Andrew Charles

Great. as billion $X.X Thanks. is we guys. up? for that asset-light of but market China question billion XXXX's the about Kevin, as ramping And know to US I down, hopefully, restaurant few should an years relative is a well you for development you. $X.X How think CapEx reimaging next simple to within winds

you could previously to the Thank is there? just comment you. XXX on Is weighing open or flareup COVID seeing still that? that there the planned you're If stores track, on on you

Kevin Ozan

Yes.

So, this The $X.X for let billion. the your to it's CapEx point with we've start year CapEx. $X.X to me said billion

expect that -- substantially I because billion similar the relatively we we with think this range billion remodeling at of be to -- The point the the $X.X for our will are year. your US we to years. of make-up next a few complete be $X.X in different will end

dollar $X.X but and envelope probably that of will will from remodels, range. percentage be $X.X units year versus standpoint new relatively at the standpoint in to the this similar more on So, be CapEx overall billion billion a

That That's opened mentioned, first everything two are openings been the our in reevaluation so being this or the or year. but today. could we you in impact large either in some open have as lockdowns keeping we some on on roughly China eye right we that's now plan store They from of XXX timing that not those a and on because last still everything close one right that that keeping months close of continue we going on from cities expect There's openings of even XXX China, quarter. the certainly are mentioned two. a on track, as on just you eye able we're China. over openings. of this to with Regarding year about but in going we've XXX, major indicated But still couple now

Mike Cieplak

with from Eric KeyBanc. is Our next question Gonzalez

Eric Gonzalez

question. the for thanks Hey

on And maybe plans for us the the assuming quarter. update those help the perhaps options through and tell think your same for you this if what remain implications think year? be an might I But Ukraine second think the the table all the could Russia on point? you mentioned by you'd on then could end provide full this stores for page at so us closed we're year you model of

Chris Kempczinski

lots But I'll think different of Sure. would looking modeling. variety people that it's considerations into get different at, imagine we we're as not constituencies. the then over you of options can talk I best start maybe Kevin there for our that and probably

second providing But it's we we the of So, on be will I being through we that end be my at this that are think best that will that go later -- in the I comments, by clarity tell opening we would quarter. not point. probably I exhaustive. as said than providing no you

it But So, at my answer up scenario isn't you Kevin come guess looking there a that is I'll leave we're on could own of that just probably at. questions. the let that and any that modeling not with your

Kevin Ozan

mean probably now, employees, just that to about is now of because ruble a I from has costs continue chain $XX near-term is partly bit little landlords, kind we our our million a think pay modeling, that I roughly right right and rate than higher some the we've talked run Russian Yeah. supply strengthened.

or for after we've by quarter, the rate Chris's run changing monthly of so. this think us likely second kind something way we kind could either that way one But of the will decision about change the keeping now happen infrastructure $XX that end of other the going million forward. of the by be or a right point and So is making to that's going what said infrastructure it a will

said modeling So think it's second perspective, what I to use we've fair the to a costs. quarter of related from kind ongoing

Going second second we'll depend up forward, the after and end we on of the and announced option where our what -- quarter, by end we what certainly what quarter.

Ukraine sales from talked the of cetera et a operating the income think I have we relevant -- obviously Russia about and size or perspective. impact both the

Mike Cieplak

is Silberman Credit Our with from next Suisse. question Lauren

Lauren Silberman

worldwide Thank convention. with to regards you. to I wanted the ask

uncertainty performance you about among your is from years. also sentiment conversations consumer talk about the environment? of some can share? over is franchisees challenges. couple just learnings lot last at Can So strong or convention takeaways talk of facing concerns So priorities to in really you the the Franchisee biggest a anything

Chris Kempczinski

a right people of feedback connect -- would use being is XX,XXX say heard a getting typically their back detailed four as now excitement I convention back what way years, for the who the together had. people again. And when that in field Sure. franchisees, from true many of you I from with tremendous we're participants haven't But to Well in we actually seen some anecdotally, a just which of our these together. was of And sure that of a I talk think lot was attended to they've being can the looking there what attending. colleagues about forward-facing talk that. through we're this also that back, been where of excitement on we've we're And also balance making headed the about conventions being did nice many world, I around also to. people hear one or remember and but be best just back

includes many relative restaurant sentiment. a operations. And come position This at, compare of finally that interest a everything number did is the four of had really be of what franchisees was not it's they things taking But that, world, And Now when and have better you about on on share looking feels franchisees the that in there's time of maybe that. our McDonald's. seen, the franchisees all international of good through you of I visibility that to goes sense part gone one. have imagine. particularly have comment US All gone think consider boy lot of would automated have there -- been which attention a be at I my things and everyone we part We that it you as that to has since as think amongst order part in McDonald's. away do around our look more last never are sort been our else on to to that from a years

different We some bring ways and to into drive-thru showed That window percent for a automation them ways was a also second lane kitchen operations. lane and people that adding we're for us at drive-thru. other thinking also perhaps dual dual interesting about

that going well. as a was convention, and but on that was just at So of socializing lot of kind everything connecting

Mike Cieplak

Barclays. Our next question is from Bernstein with Jeff

Jeff Bernstein

very you Thank Great. much.

rollout. a loyalty question on Just the US

maybe mentioned number maybe I'm push members, to the other for initiatives plan. some business. average think XX assuming some your like US I'm similar you're the traffic give maybe million ramp. I in I number. total the which base quick industry using to color think the And a That that it learnings you implications? can can or maybe just you kind know being is pretty seems And wondering where leaders unique those know you of check Obviously, above on go? that you you mentioned or of customer

would color could you any So give great? be Thank you.

Chris Kempczinski

Sure.

the play. the loyalty with fact roughly visit start that see a always one US XX% of our frequency viewed I'd we've given a for population time. least us at So restaurant In in the that as we year

So big a reach have we at McDonald's. don't opportunity

for with way been the about to driving our frequency one encouraged we've to we've drive far has of us by always it proven Our And effective loyalty things frequency. that among an what be users. is seen opportunity is so

our early where view of we terms In this. is on we're still innings are,

to I'm as of our that's our that continuing And get engagement. here what driving things us is levels for one performance? And the we're size most of to then facts of is focus penetration on versus drive low have here. predictive the We metric So enrollment is total belt overall opportunity future be the under it we it time is market and but with of under absolute all spending right year's doing more on also lot analysis a that early We're at once members? tighter would got XX on we've share some But it to days? had Is get we've point conclusive that come as data back headline. be Is sure our monthly? the that a you. findings just worth we'll some And of belt. innings of

Mike Cieplak

with is Our America. from next Senatore Sara question Bank of

Sara Senatore

I to down, a mentioned sort you. delivery. of know consumers to added is maybe wanted pay differences industry. speaking same go but up of Thank sense that down at maybe fees of among the the still the for are seeing. you going bit time trade you're willing convenience US back the my people not fact seem And in to the for I broadly

not as a sense in drive-thru across the versus there through just using being your you So the much availability menu customer difference delivery access one that is is based a who's continuing pay delivery? -- the as could -- in it higher convenience there's to maybe drive-thrus? the little that is is if for premium of broadly countries, penetration look at on different more a you And with persons

Chris Kempczinski

Yeah.

are the QX. the good point I optimism think that which consumer from head again in our overall gives US at into strong, we shape. the broadly headline speaking sheets talked earlier And the as the us about US is consumer I vantage is balance average in as

income is that an that pressure slice and would what And that lower there have that in of that these rents on prices see to We data the us have the have puts income consumer. I start always lower the think do value pocket consumer you Now allow you and deaverage, situations. book do particularly would to to detailed love probably don't you which increased you around around pressure sensitivity that is to that it. the with dice type gas

of ways and having still as McDonald's are our relative to scores us the we use need always And our we proposition. stay strong for lot more we to to probably certainly that value. to important have pressure value think an things for make consumers it's giving us, at one It is to the is We're income So is sure we value things of ZIP pleased defines fair But probably proxies our average I look a consumer that the because as that lower be making right continue codes than credit the consumer. why wealthier sure we're that through consumer say and part other that. that's sight competition, or it. that, now and we -- team that feeling good for on of of that being of are consumers. of we that providing inflation value. of long franchisees sure being need we do a value. US just But navigate for of history to we're there's earlier, a through the kind on think time to track stay don't value always good where on gotten lose But lose of of as to that still need -- make track. Kevin us to to to lot some off When talked that. spending be we've how we the with And to Joe a lot a there's got competitive different working we've

promise is US our vantage shape. we're not sight the from good in of I So still can point broadly consumer But losing it. you,

Kevin Ozan

is the about, is thing there I'd your delivery in kind our In, around are it strongest markets. little only delivery add world? different dynamics point is to in US. The delivery of one percentage here Europe than of the general our a UK higher

population said, are the multiple in play. they rural are think, so for a Obviously lower I US, general, in factors versus there's they our Europe percentage in the of bit higher et Europe are cetera in little that. delivery than urban little all some percentages bit US. in But than drive-thrus that of are a it into comes density

Mike Cieplak

Our is with John Ivankoe from JPMorgan. question next

John Ivankoe

The was daypart. by is the little thank and could color I US on more hoping you question Hi, traffic give you. a bit on

relative you square I below Thanks. that maximize where an to night? can And in hours results in continue offset average breakfast lunch of by positive if XXXX? kind you in rooms the store some maybe seeing that comment, of an actually And with negative do footage have maybe utilization? that late assume dining dinner to resides you're and within results you and the are opportunity would increasing have do were opportunity If maybe I of some

Chris Kempczinski

would comp much has at be on actually look we've a basis, from I sales standpoint. a tell into look and it our we've more performance seen standpoint, getting seen for Lunch a at three-year from you on you basis a it breakfast bit or us. dayparts, whether modest been various standout decomposing performers dinner into little Sure. Well, too QX a that, without comp you

Late of night off we've we and imagined good really variety breakfast So a what about traded for dinner. as reasons. seen feel at again have would you

two cetera. are But Some strong. of operating hours there was those it related et to elements

not lunch As just our is want forward, Kevin, we part two levels mix. the to still We're other growth It's seeing look it's know going the think same to daypart at certainly what don't of in that. like add? that biggest dayparts. those you I about in going we're seeing if

Kevin Ozan

thing and operational, stores sales in I'd meaning only the operating your both the those drive-thru in say night cetera. to point not in is fully cetera. the capacity but where hours point McDonald's The restaurants XX% stamp still hours related from et to I dine-in think US reopening they're roughly are of they now, et open helps from pretty pressure Right is I'll and rest that bit for a down et were say, probably to throughput in so. It's And moving reopen. just bit – we dine-in traffic hours. some fully pre-pandemic. the operational – overnight be your the just some little down a down to sales expect but store part little of traffic, We first the lift that's generally see same do few pressure drive-thru dining And a cetera. when from and late outside next months are are not obviously because dramatic, rooms specifically There or just

during gain at some of those traffic if – to traffic our is and some potential us be also hours of overnight point late So to there those at night some comes more able hours. to back

Chris Kempczinski

over that count comp play standpoint it's quarter, from as but out the in just question said I'm the quarters. mentality guest mode. on played The is we're in not which standpoint QSR. share-taking played it's this question. just throw a saw and we may add And last I'll well it's only I thing, out a there. be call the I that, earnings – out QX the a out sales in several but as from within the know, I don't out And behind our both whole played is would last

our share and own mindset is the seeing on within and compared is the on and is that's how our traffic. in we're relative what performance our to about stealing our numbers also mix peers sales So both interesting, but QSR about it's

Mike Cieplak

question is Piper Nicole from Sandler. next with Miller Regan Our

Nicole Miller Regan

Thank much. that. I coincides so because with to something you that ask really And perfect timing wanted

taking to validate wanted I So share that traffic or down. you're reconcile

to losing peers. or you're So to used there? what messages share Is if your tools convenience the not at legacy eating home stores? so break QSR customer Are from you places? are those people to get and them back a going taking And

Chris Kempczinski

Yeah.

definition IEO, there. broaden less point it traffic it's mean, share in I larger a out seeing a you a US. to of if are than – loss a loss type is we decimal the little bit of share So which

we've I think like maybe that that versus IEO. or lost US the in X.X it's only. something That's

that. actually change time you're to open comparing feeling change It's market. we're you against there's the closed. If little off in challenging comparing so versus IEO US at taking And given IEO both bit a a all you when in and the look of But just looking about over three-year as was share good performance globally number globally on who we're period and XXXX QSR we're actually IEO in a share at know even conclusion the was who much noise or it what around seeing. It's noise difficult you're share the make

Mike Cieplak

from question RBC. Carril Chris is with Our next

Chris Carril

earlier can guidance? commentary Kevin to provide your your from the Thanks morning. I for range on and provided. the so mid-XX% Good up the cost consolidated pricing, believe guidance operating question. Hi. any hasn't thoughts around margin previously you following just further on low changed taking inflation

more could operating of if current the expand that a you on the context So in curious bit little backdrop?

Kevin Ozan

Yeah.

good I year get won't leverage going feel to forward. range. for think mid-XX% low We still the we hope pretty we for that this all would obviously that about

large get we're leverage I to pressures opportunity that that these on there's still is low inflationary think why which mid-XX range. So with post to remaining

someone it pressures why near-term this than mid-XX% for that. And higher I are the wasn't keeping asked to think last low inflationary the quarter that I think range at year.

a, inflationary it there's back a I'll post-XXXX, low to those what to margin leverage opportunity again these on that believe call forward. on pressures, happens obviously to if down level, get line going but gain reasonable a depending with we I think all operating

Mike Cieplak

question next Mullan Our is with Brian Deutsche Bank.

Brian Mullan

you. the the back kind share business thank A of gain US question Hey, to mentality. on

this year. You've called business area an as out chicken for the focus of

a from however in to you today XXXX? did how multiyear take in opportunity have is see sense could much And here what menu you then Just the if wondering you this do give see you the of have And a runway share versus share it? side? you or

Chris Kempczinski

Sure.

and of chicken Beef those. we're in in in is picked or US if So, over from market a where own or there beef in if the you we've think being there sandwich share obviously part we've -- share about burger sizable about a And of you think taken there. versus about X/X we we at point up standpoint a little the XXXX. the on were where significant business burger the most two and is as of our US obviously areas share our both

Crispy is of which up at point sizable still if the think look not there to as If chicken, about of the us important for about part of were prior Chicken we've X.X picked you but we share you Sandwich. the an launch where business,

And three our on Arches share performance maniacally markets. thing of track and share focused Accelerating all burgers. It's categories our areas So, seeing of and we those with coffee we're across of both three all chicken, those in areas. the is our good on strategy, those

Mike Cieplak

next question Jon Our with is Tower from Citi.

Jon Tower

in then the question on expense like previous think kind costs put there Chris the impact we an a make piece ongoing a Russia And clarification want question operating is terms Should answer the Kevin, But that's more of to quick into and business. Ukraine clarification. that then question. get those about hit income was to looks the this. A side clarification? remain future of to of line. Thanks. Great. in other And the just it I sure US I the in you I further of expect

sense check or much been of in the been the really out positioned it's on I by took relative COVID. that an have just growth brand way pricing has traffic especially in think US, side, to part focused terms the more versus historically absolute on never around in that shifted the off growth coming of ensuring seems In

share the future something into a is on on future? that traffic expect And relative to gain basis you traffic? business think is to persist the versus front it in about So, the the right absolute more

Chris Kempczinski

us the -- we're I'll that. of read struggle the way relative another with what levels all how a Kevin is what go-forward at our lot give -- in look all certainly we we've you since basically our is it's called that stuff is to for out it's category, my behavior probably that thought about figure or the for you entire sort us right clean think of was and with delivery be stuff XXXX, right And his through beginning the of would that there yet then I get way recognized to hit Yes. of assessing. probably through in. We're our digital, don't more changing we've unclear the we to all the own -- selling which point. think I to at the guest there out with just versus which and all just But way I means. and and on we've this whether on performance say, But then more still competitors at it's said various are historic whether and think other what why consumer counts of units. shortfalls across can Kevin seeing of a I calls still is industry of last up traffic. think chime COVID came approach which that

the our absolutes long about bit we are worry so be And little beating feel about may more as we're stealing are good and it. less And competitors it's what we we about share. a

Kevin Ozan

those Russia about We your in then cost. other operating. Jon And included question put the

the think detail. line I have a we separate in

call maybe. it we impairment other think charges I and

it those the I was think easiest specifically in to out. costs call our way mind, specific

the restaurants operations closed. we understands, what those costs incurring everyone related So to are are while

just our effectively operations able same So that going intent we're the occurring. be the costs show aren't is to to do forward to incurring to related all

Mike Cieplak

hour more. Mark take Goldman Sachs. one Garber Nearing we'll Jared the with

Jared Garber

taking in. you years especially a business commentary Thanks longer-term on I swing for driver it. couple maybe the has to been squeezing in since Obviously, the the digital appreciate wanted I me last and back a evolution the view. key of And digital to about technology increased you launch integration think the how maybe of is? evolves? how MyMcDonald's. Can term digital maybe what in your walk Chris through restaurants? of longer on us next thoughts and automation And kind

Chris Kempczinski

start Sure. Well digital think I'd I everything. with changes

allows XX% don't So a know they plus Are their -- are today I don't to what customer of approach. analog through buying type don't that deal personalization they know know coming us someone do there into us of of is. a customers scale pattern don't of of our my don't for. faster board. to are. the them I I'm I is of know a cleaner be to to much know for. offers give give programs I going I McDonald's to they they almost I'm necessarily digital they're that the going cleaner And prior one-size-fits-all able like a going them for to what I'm over impossible thing do be app them of looking I them deals be seeker. service. customers XX% who restaurant, to able purchase. it And be able preferences and to Do I'm of I try to to type So be what at more better more each with things? give orders always more menu experience. the able going time that going their get to starts at a visibility new personalized same looking identify it's speed thing? to as into to be are give customer level sort It's is better track to bespoke better going a not to can actually and who

opportunity and speed has It start service much to operations, then of restaurant positioning it do gives get can it gives you that more opportunity labor purchases this buying you into to integrated get benefits. data behaviors you of automation. you As about

economic change looks on just unit still of entire can early restaurant the for think like. it profile the a I So very better what We're this.

out building and all to out day if I that's there So where to to there going running I in recognize -- we're new want if who we this. day out a think anybody make because of headed those against years further are go opportunity But I we us the business inroads. of you and want caution tremendous don't there is model can XX off

Mike Cieplak

who a Thank you, Chris everyone and day. Have joined the Thanks call great today. Kevin.

McDonald's (MCD) 28 Apr 222022 Q1 Earnings call transcript