McDonald's Profit Misses Estimates
McDonald's Corp has missed Wall Street estimates for its quarterly profit as some restaurants in Europe and elsewhere remain closed due to the coronavirus crisis.
CEO Chris Kempczinski also said that he believes that the world's largest fast-food company "reached a trough in terms of number of restaurants closed in late March."
Approximately 75% of its 39,000 restaurants around the world were operational as of last week, including almost all of its nearly 14,000 restaurants in the United States.
The company also said it has resumed operations in nearly all of its restaurants in China, but that demand remains low as consumers have not fully returned to their routines.
In the United States, the company's biggest market, drive-through orders have risen to 90% of sales during the outbreak, up from approximately 66% normally, and its ability to offer quick, affordable food will be an advantage in coming months, executives said.
"As markets start to open up, this desire to really return to familiar favorites, to brands that are known, is very, very powerful," Kempczinski said during an earnings call.
Earlier this month, McDonald's withdrew its outlook for the year, citing uncertainties related to the health crisis and its impact on global economic conditions.
The burger chain had pre-announced a 3.4% fall in first-quarter comparable store sales, with US sales rising just 0.1%, powered by strong demand before the pandemic.
In March alone, global comparable sales fell 22.2%, the company said in early April.
Net income fell to $1.11 billion, or $1.47 per share, in the first quarter ended March 31 from $1.33 billion, or $1.72 per share, a year earlier.
Analysts were expecting a profit of $1.57 per share, according to IBES data from Refinitiv.
Revenue fell 6.2% to $4.71 billion, but was above Wall Street estimates of $4.65 billion.
A Safe Bet
Even so, some analysts see the company as a safe bet for troubled times.
McDonald's offers "appealing blue chip characteristics amid a fluid near term set-up," including "the cleanest balance sheet in [quick-service restaurants], the benefits of scale that manifest in superior customer value perceptions and industry-leading US franchisee cash flows," Cowen analyst Andrew Charles wrote in a note.