OAK BROOK, ILL. — Several initiatives bolstered McDonald’s Corp.’s financial performance during the second quarter of fiscal 2018, ended June 30. Company efforts included an emphasis on its value menu, self-ordering kiosks in remodeled stores and delivery. An issue challenging the global fast-food chain is in many markets around the world fewer customers are visiting stores.
“Globally, comparable sales increased by 4% during the quarter, marking up 12 consecutive quarters of comparable sales growth,” said Stephen J. Easterbrook, president and chief executive officer, during a conference call to discuss quarterly results. “Global comparable guest counts declined slightly during the second quarter, dropping by 0.3%. Guest counts grew in all of our international operating segments. In the U.S., quarterly guest counts decreased from a year ago.”
Despite the guest count decline, McDonald’s net income rose 7% during the quarter to $1,496.3 million, equal to $1.90 per share on the common stock, when compared with the same period of the previous year.
Sales for the quarter fell 12% to $5,353.9 million.
“An important part of our U.S. plan includes delivering a balanced mix of both higher average check and comparable guest count growth,” said Kevin M. Ozan, McDonald’s chief financial officer. “…We’re seeing positive benefits in average check. However, we remain intensely focused on increasing customer visits. As we’ve said in the past, we must be competitive on value. We don’t strive to win on value, but we won’t lose on it either. With a sluggish I.E.O. (informal eating out) market and the introduction of our $1 $2 $3 Dollar Menu at the beginning of the year, we’ve seen our competitors increase their attention on deals. Therefore, we know that we need to be more aggressive to compete effectively. While our $1 $2 $3 Dollar Menu is driving incremental sales and guest counts with our budget, basic, value customers, we need to do more to attract other customer groups.”
In addition to the value menu, the introduction of self-ordering kiosks and delivery are enhancing McDonald’s average check size.
“ …The more customers that choose to order (from) the self-order kiosks tend to dwell a little longer and spend a little more…,” Mr. Easterbrook said.
McDonald’s now offers delivery from more than 13,000 restaurants globally.
“Delivery is becoming a meaningful contributor to our sales,” Mr. Easterbrook said. “In several of our top markets, delivery now represents as much as 10% of sales in those restaurants offering delivery.
“Delivery requires virtually no additional investment and is tremendously effective in bringing profitable and incremental guest count. They’re continuing to see delivery orders of about double the size of standard restaurant average check.”
Efforts underway to improve guest counts include giving franchisees some flexibility in the items featured on the value menus in their region. McDonald’s also is shifting some national marketing resources to local markets to support sales during the morning daypart.
“I’m not going to give a whole detail about it, but you can expect us to be reactive and far more agile in the way that we respond in the marketplace,” Mr. Easterbrook said. “And the owner/operators are absolutely consolidated and behind that decision because they want to grow guest counts because they know that’s the ultimate lifeline of our business.”