McDonald's Expects Its Overall Sales Growth To Be In 'Low Double Digits' In 2021; Misses Wall Street Estimates For Q4 2020 Profit And Revenue

By Dave Simpson
McDonald's Expects Its Overall Sales Growth To Be In 'Low Double Digits' In 2021; Misses Wall Street Estimates For Q4 2020 Profit And Revenue

McDonald's Corp expects its overall sales growth to be in the "low double digits" in 2021, and has forecast that an increase in its US market will be offset by the impact of the COVID-19 pandemic in parts of Europe.

The Chicago-based hamburger chain missed Wall Street estimates for Q4 2020 profit and revenue, with comparable sales in its international operated markets falling by 7.4% largely due to weakness in France, Germany, Italy and Spain, where the coronavirus crisis has been intense.

Several European countries imposed tough restrictions when the pandemic surged again late last year, compounding the difficulties faced by a restaurant industry already reeling from the impact of COVID-19 for much of 2020.

Those markets are not expected to see margins return to pre-COVID levels in 2021, McDonald's chief financial officer Kevin Ozan said in a call with investors, although McDonald's still expects to open 1,300 new restaurants around the world this year.

Shares in McDonald's rose by approximately 1% after it said that its global comparable sales fell by 1.3% in the quarter that ended on December 31, which was better than an anticipated 1.46% drop and an improvement over the previous quarter, when they fell by 2.2% year-on-year.


Total revenue fell by 2.1% to $5.31 billion, missing the $5.37 billion estimate. Excluding one-time items, earnings per share were $1.70, missing the average analyst estimate by 8 cents.

Comparable sales in the United States, however, rose by 5.5%, beating an estimated 5.15% increase.

To drive its US business, the restaurant chain has leaned on its US drive-throughs, limited offers such as the McRib sandwich and celebrity collaborations such as the Travis Scott Meal.

In January, US comparable sales are expected to be in the high single digits, with spending assisted by government stimulus checks, Ozan said.

The prospect of raising the US federal minimum wage to $15, which is a measure that was introduced in Congress last week and supported by President Joe Biden, could be managed through "judicious" menu pricing and productivity savings, McDonald's chief executive Chris Kempczinski said during the call.


"So long as it's a staged way and in a way that is equitable for everybody, McDonald's will do just fine," Kempczinski added.

Tension With US Franchisees

He also acknowledged tension with US franchisees over costs and other issues.

"We always find our way to work through these," he said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.