McDonald’s (MCD) results missed the mark to end 2024 as the fast food chain faced an underperforming stock, lackluster sales, and an E. coli outbreak.
Revenue at the fast food giant for the fourth quarter decreased 0.28% from a year ago to $6.39 billion, missing expectations for $6.45 billion. Adjusted earnings per share of $2.80 were also lower than Wall Street’s estimate of $2.84.
Global same-store sales for the quarter ended Dec. 31 were up 0.4%, compared with an expected decline of 0.91%. But US same-store sales were down 1.4% year over year, as an E. coli outbreak offset momentum in late October. The burger chain alluded to a decline in check growth, offset by slightly higher guests count.
CEO Chris Kempczinski told investors that the company is moving with “urgency” as it looks to increase guest count, win market share, and reclaim “leadership in value and affordability.”
Global same-store sales for the quarter, which ended Dec. 31, grew 0.4% compared to an expected decline of 0.91%.
International-owned stores saw positive same-store sales growth in the Middle East, which CFO Ian Borden attributed to the lapse of the impact of the Israeli conflict, plus growth in Japan and “encouraging signs of stabilization” in China.
Many on the Street hope the fourth quarter results are the “low point in recent history for the brand,” as Citi analyst Jon Tower wrote in a note to clients. In 2025, the chain aims to regain foot traffic with its McValue menu platform and new offerings from chicken strips to the return of snack wraps.
Here’s what McDonald’s reported for fourth quarter results, compared to Wall Street estimates, per Bloomberg consensus data:
Revenue: $6.39 billion versus $6.45 billion
Adjusted earnings per share: $2.80 versus $2.84
Global same-store sales growth: +0.4% versus -0.91%
US same-store sales growth: -1.4% versus -0.35%
International-owned same-store sales growth: -0.1% versus -1.22%
International franchised same-store sales growth: +4.1% versus -0.38%
Here’s what McDonald’s reported for the full fiscal 2024 year, compared to Wall Street estimates, per Bloomberg consensus data:
Revenue: $25.92 billion versus $25.99 billion
Adjusted earnings per share: $11.39 versus $11.74
Global same-store sales growth: -0.1% versus -0.39%
US same-store sales growth: +0.2% versus +0.44%
International-owned same-store sales growth: -0.2% versus -0.50%
International franchised same-store sales growth: -0.3% versus -1.39%
McDonald’s McValue platform is launching in US restaurants in 2025.(McDonald’s)
Kempczinski said January was sluggish across the US restaurant industry.
“It sounds like January was not a good month across the board, mostly driven by really poor weather in every region — snow, extreme cold,” BTIG analyst Peter Saleh told Yahoo Finance prior to earnings. The conditions make it difficult to assess whether the value menu drove incremental foot traffic.
Ahead of the earnings report, TD Cowen’s Andrew Charles said he’d be looking for company-operated stores’ margins and any impact from the value offerings.
Net income fell 1% to $2.02 billion during the quarter and was down 3% for the year to $8.22 billion.
Franchise operators had hoped that the McValue platform would lure in customers, offsetting any hit to margins.
“There may be a margin challenge where we are providing food at a great value, but if we can bring more people in, then it will take care of that. That’s our goal,” David Costa, a McDonald’s franchise operator who operates 18 locations in Florida with his father, told Yahoo Finance prior to the McValue launch in January.
Borden said parts of the platform, such as buy one, add one for $1, led to “good margins” and allowed the customers flexibility in building their meal. He added that breakfast continues to be a strong performer and hinted at innovation to come.
2025 is expected to be a year of value and affordability for McDonald’s. It’s looking to win back low-income consumers and lure customers in with menu innovation.
“With good value at the foundation, we will overlay a strong pipeline of creative marketing ideas that will delight our fans and will provide full margin check growth,” Borden said.
That includes building on its chicken portfolio with “the potential to add another point of chicken market share by the end of 2026.”
Analysts say the company’s efforts will show up in results for the second half of the year.
“The comparisons get so easy in the second half that even if they fumble through the first half …[McDonald’s is] still going to have [a] positive, constant recovery story in the second half,” Wedbush analyst Nick Setyan, who has an Outperform rating on the stock, told Yahoo Finance on the phone.
Saleh, who has a Neutral rating, said franchisees are worried about the overdependence on promotions.
In January, the buy one, get one offering made up a mid-teens percentage of sales, and the $5 Meal Deal accounted for low-double digits. Franchisees also offered in-app promotions, according to Saleh’s note to clients.
“When 35% of your business is now on steep discount or free, [it’s] hard to really make a lot of money on that,” Saleh said. “[It’s] going to be tough to wean the consumer off of that and bring them back to kind of more profitable type products.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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