Despite some lingering doubts around McDonald’s latest turnaround effort, the fast-food titan’s fourth quarter numbers indicate it is on the rise. Global comparable sales were up 5 percent in Q4 and 1.5 percent for 2015. In the U.S., fourth quarter comparable sales jumped 5.7 percent.
Yesterday during an investor teleconference and webcast, CEO Steve Easterbrook along with CFO Kevin Ozan ran through the latest numbers while also looking to the year ahead.
Easterbrook credits McDonald’s renewed focus on operational excellence, relevant menu news, and strong franchise relations as key components to these encouraging sales increases. He adds that the company is working to not only enhance the quality of its menu offerings but also to make it more convenient.
It’s a tricky balance to achieve, but thus far the all-day breakfast initiative, which launched in early October, has championed that balance. McDonald’s committed to returning to the basics with its recipes, as evidenced by bringing real butter back into its Egg McMuffin. It also made favorites like the McMuffin and Hash Browns more accessible to customers by offering them through the day.
So far, Easterbrook says all-day breakfast has “exceeded expectations.”
When asked about creating a better value for customers with quality, Easterbrook says the devil is in the details from an operational standpoint. This creates a bargain: Customers know you care about the same things they care about and they respond with their business, he says. Committing to source cage-free eggs and antibiotic-free chicken are two examples of how McDonald’s is adjusting its values to reflect those of its customers.
Other less predictable factors also influenced the brand’s performance in the U.S. and abroad. Domestic commodity costs decreased 1 percent thanks to lower costs of beef. The mild weather in the late fall and early winter also boosted sales in the U.S. while the terror attacks in Paris negatively affected business in France.
Easterbrook says greater alignment with franchisees is crucial to boosting business; McDonald’s has already refranchised some 470 restaurants.
All in all, Easterbrook says 2015 was a year of change and that McDonald’s will continue to strive to become a modern, progressive burger company.
For more on McDonald's 2015 and Q4 results, see the full report.
By Nicole Duncan