McDonald’s reached a milestone in 2019.
The fast food giant reaped more than $100 billion system wide “achieving our highest global comparable sales growth in over a decade,” company president and CEO Chris Kempczinski said in a statement.
But one global market that has been a focus the company’s investment is China, where authorities are currently dealing with the outbreak of the coronavirus which has sickened thousands and led to the deaths of over 80 people.
McDonalds’s has closed all of its restaurants in Hubei Province, home to the city of Wuhan, the epicenter of the outbreak. While that represents hundreds of locations, roughly 3,000 McDonald’s restaurants throughout China remain open.
Kempczinski said in an earnings call with investors that roughly 9% of the company’s restaurants are in China, but the country represents only about 4% to 5% of sales system wide.
“China is a critical market for us and we’re very concerned about the situation over there,” he said. But “it’s actual impact on our business is going to be fairly small assuming (the virus) stays contained to China.’’
U.S. traffic has dropped
Though the popularity of delivery and quarter pounders made with fresh beef lifted sales in the U.S. last year, the number of customers visiting a McDonald’s dropped.
The battleground for increasing those numbers will be breakfast service, McDonald’s says, an area where rivals like Wendy’s and Burger King are making major inroads.
“Getting the U.S. a positive guest count growth is a number one priority for us,’’ Kempczinski said. “We have to win in breakfast.’’
Increasing the number of customers is a particular priority for the more than half of franchise owners who are the second or third generations in their families to operate a McDonald’s restaurant.
“It’s largely a family business in the U.S.’’ he said. “They completely recognize that no family business survives or thrives by passing on fewer customers.”
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While new breakfast items and low prices will be a priority, the rest of the day’s menu is also likely to be tweaked this year, said Kempczinski, adding that customers should expect “burger news.”
Additionally, McDonald’s began testing two new chicken sandwiches in December following the frenzied demand sparked by its rival Popeye’s which debuted a new fried chicken sandwich in 2019.
McDonald’s says new beverage and dessert options are also possibilities in the new year.
These are the first months of Kempczinski’s tenure as CEO. He replaced Steve Easterbrook, who was fired in November after he violated company policy by having a “consensual” relationship with an employee.
McDonald’s sales worldwide rose 6% during the three month period that ended Dec. 31. Diluted earnings per share rose 14% to $2.08 as compared to $1.82 during the fourth quarter the previous year.
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