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McDonald’s Profits Drop Amid Rising Costs & Slowing Sales in Australia & China – $MCD $DIA

By John F. Heerdink, Jr.

Reportedly, McDonald’s Corporation (MCD) missed Wall Street estimates as a result of higher costs and slowed sales in its over 4,500 restaurants in Australia and China even thought they realized gains from growth in the United States in the fourth quarter.

Operating costs increased 14% to $3.61 billion as supply chain bottlenecks led the world’s largest burger chain to spend more on ingredients and packaging material. U.S. food and paper costs increased 4% in 2021 which the company expects to roughly double in 2022. U.S. same-store sales increased 7.5% in comparison to analysts’ estimate of a 6.8% rise, driven by the launch of special menu items such as McRib, loyalty program-driven growth in digital sales, and a 6% increase in menu price in 2021. Sales in China reduced 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 to a year earlier.

“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. Rising consumer inflation levels are putting pressure on restaurant economics,” stated Chief Executive Officer Chris Kempczinski.

Sales growth in Italy, Germany, France, and the United Kingdom also helped boost global revenue by 13% to $6.01 billion in the three months ending Dec. 31, slightly below estimates of $6.03 billion. Global same-store sales jumped 12.3%, higher than Wall Street estimates of a 10.73% rise.

McDonald’s Corporation (MCD) is the leading global foodservice retailer with nearly 37,000 locations in over 100 countries. The Corporation operates and franchises McDonald’s restaurants in the US and across the globe with over 90% of its restaurants owned and operated by local, independent businessmen and women. To learn more about McDonald’s Corporation (MCD) and to track its progress please visit the Vista Partners McDonald’s Coverage Page

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives. 

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(Read Original Story: McDonald's profit hit by rising costs, pandemic curbs in Reuters)


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