CHICAGO – Strong fiscal 2021 financial results has given McDonald’s Corp. momentum heading into fiscal 2022, and management plans to build on its success in the United States by focusing on its chicken menu items, enhancing digital services and driving greater customer loyalty.
“In the US, we finished the year strong with comp sales up 7.5% for the (fourth) quarter and over 13% on a two-year basis,” said Kevin M. Ozan, chief financial officer, during a Jan. 27 call with securities analysts. “We saw positive comps across all dayparts, which are still benefiting from average check growth, driven primarily by strategic menu price increases.
“Our MCD pillars continue to drive US comps as strong marketing efforts behind McRib and the crispy chicken sandwich were complemented with digital adoption by our customers. Digital growth remains a key driver of success in the US.”
McDonald’s net income for the year ended Dec. 31 was $7.6 billion, equal to $10.04 per share on the common stock, and a sharp rise from fiscal 2020 when the company earned $4.7 billion, or $6.32 per share. Fiscal 2020 earnings were pressured by the COVID-19 pandemic and government actions that led to the closure of many restaurants around the world.
Fiscal 2021 sales were $23.2 billion, up 21% over the year prior.
Christopher J. Kempczinski, president and chief executive officer, said core menu items like the Big Mac, Chicken McNuggets and french fries drove almost 60% of McDonald’s total business during the year.
“To complement our leadership in beef, we're also focusing on growing our market share in chicken by leaning into the strength of core equities like Chicken McNuggets as well as creating the core classics of tomorrow,” he said. “We've begun to make progress with new chicken sandwiches in the US in many of our international markets. We've gained IEO (informal eating out) market share in chicken in every single one of our top 11 markets since 2019.”
Mr. Kempczinski said he sees digital growth as a long-term macro trend that is going to drive McDonald’s business.
“We're now at about 25% of our businesses through digital channels,” he said. “I think that number is going to continue to grow. We have some markets where that number is north of 50% of the business, like in China, like in France, (and) others are very close, like in the UK where it's right at about 50%.”
Much of McDonald’s digital focus is on the customer’s experience, but Mr. Kempczinski said as the fast-food company digitizes more transactions it will create opportunities on the operations side of the business.
“This is going to be something we’ll be talking about for years to come,” he said.
Ramsey Baghdadi, consumer analyst at the market research company GlobalData, London, said McDonald’s has done well adapting to rapidly changing consumer behaviors brought on by the pandemic.
“According to GlobalData’s latest survey, over half of people globally prefer to order a takeaway or an online delivery from restaurants than dine-in — a trend that is here to stay in the long term,” he said. “McDonald’s quick investments and adoption of digitalization demonstrate the company’s promising market leadership and longevity.
“It’s safe to argue that if the company did not make these investments, it would have severely affected the overall customer experience during 2021 and, more importantly, its sales performance.”
The biggest driver of digital adoption is loyalty, according to McDonald’s. After six months operating in the United States, McDonald’s has over 30 million loyalty members enrolled in its MyMcDonald’s Reward program of which 21 million are active members.
“With loyalty, we’re building on a strong legacy of meaningful customer relationships and driving greater customer engagement and reengagement,” Mr. Kempczinski said. “And in the first few months of our loyalty launch, we’re seeing an increase in digital customer frequency of over 10%.”McDonald’s net income for the fourth quarter of fiscal 2021 was $1.6 billion, equal to $2.18 per share, and a 19% increase over fiscal 2020. Quarterly sales rose 13% to $6 billion.