McDonald’s Corp. has a number of famous items on its menu, and the fast-food giant has turned its focus toward those products to drive results.
Though fourth-quarter earnings missed expectations, revenue rose 13.1% to $6.01 billion, and global comparable-store sales increased 12.3%.
“While we expect that 2022 will be a year of continued progress, we also anticipate that many of the challenges we experienced in 2021 will endure,” said Chief Executive Chris Kempczinski said on the Thursday earnings call.
“A surge in COVID-19 cases and a return of restrictions in many of our markets are creating uncertainty around the world, exacerbating labor shortages and supply chain delays. Additionally, rising consumer inflation levels are putting pressure on restaurant economics.”
Three items contributed more than half of the company’s total business for the quarter.
“Iconic favorites like the Big Mac, Chicken McNuggets and our world-famous french fries drive almost 60% of our total business,” Kempczinski said.
Beyond these well-known items, limited-time items and new additions across the globe also gave the quarter a boost. The company called out “strong menu and marketing promotions, such as the McRib and Crispy Chicken Sandwich,” as contributors to strength in U.S. comparable-store sales.
Although global comp sales missed expectations, U.S. same-store sales rose 7.5% to beat forecasts for 6.8% growth.
And Chief Financial Officer Kevin Ozan called out the Double Big Mac in the U.K. and the new premium chicken line in France, which includes the McBaguette.
A Chicken Big Mac is coming to the U.K. on Feb. 2 for a limited time.
And the plant-based McPlant, created with Beyond Meat Inc.
is expanding to about 600 additional U.S. locations starting Feb. 14.
“The company’s agility has also been demonstrated through innovations in its menu items,” wrote Ramsey Baghdadi, consumer analyst at GlobalData, in a note.
“At a time when outlet closures and ingredient shortages have proven key challenges, McDonald’s opted to slightly alter versions of classic menu items such as the McSpicy. These changes simultaneously satisfy adventurous consumers and those who gravitate toward familiar items with little operational changes needed on their end.”
McDonald’s says its focus on the loyalty program, which reached more than 30 million members in the U.S. in six months, and the growth of its digital business, exceeding $18 billion in 2021 , or more than 25% of total sales in the top six markets.
Customers might be eating up the offerings at McDonald’s but feedback to the latest Kalinowski Equity Research franchisee survey, which was conducted before the earnings were announced, was lukewarm or negative in some spots.
“Based on the first half of January, the first quarter is going to be weak — even with increased menu prices,” said one franchisee.
“Expect some price resistance from customers. Average check increases driven by menu price increases almost always reduce[s] transactions,” said another.
And when asked about the loyalty program, one franchisee said, “We give away too much food.”
Still, other franchisees found reasons to be upbeat.
“All stakeholders in McDonald’s should be thankful for our drive-throughs,” said one.
McDonald’s stock slipped 0.5% in Thursday trading, but has gained 20% over the last year. The Dow Jones Industrial Average
is up 12.5% for the past 12 months.