McDonald’s Corp (MCD)

This morning, we published an industry report entitled “Updating our Q1 Kalinowski Quick-Service Burger Same-Store Sales Index.” We encourage you to read that report in conjunction with this McDonald’s note.

Earlier today (Monday), McDonald’s reported adjusted Q4 EPS of $2.83. This was fairly close to our $2.85 forecast and sell-side consensus (according to Consensus Metrix) of $2.84. We calculate that the adjusted Q4 tax rate was 19.9%. This was more favorable than our 20.5% projection and consensus of 20.6%. The lower-than-forecast tax rate helped Q4 EPS by about +2 cents, relative to our projection.

McDonald’s plans to release its fourth-quarter earnings before the market open on Monday, February 10th. Today we publish part two of the January 2025 edition of our proprietary McDonald’s Franchisee Survey. As part of this, we asked our franchisee contacts to provide some commentary about the upcoming return to McDonald’s U.S. this year of Snack Wraps.

McDonald’s plans to release its fourth-quarter earnings before the market open on Monday, February 10th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today.

Quick-Service Burger Same-Store Sales Index.” We encourage you to read that report in conjunction with this McDonald’s note.

Earlier today, McDonald’s reported adjusted Q3 EPS of $3.23. This matched our $3.23 forecast, and was two cents above sell-side consensus (according to Consensus Metrix) of $3.21.

McDonald’s plans to release its third-quarter earnings before the market open on Tuesday, October 29th. Today we publish part two of two of the October 2024 edition of our proprietary McDonald’s Franchisee Survey. As part of this, we asked our franchisee contacts to provide some commentary about the Big Arch burger. This larger, more satiating burger is currently in test in Canada, Germany, and Portugal. What do our U.S.-based franchisee contacts think about the possibility of the Big Arch being rolled out in the U.S. at some point.

After today’s (Tuesday’s) market close, the CDC (Centers for Disease Control and Prevention) issued a Food Safety Alert: the CDC “is investigating 49 illnesses in 10 states linked to McDonald’s Quarter Pounder hamburgers. If you ate a Quarter Pounder hamburger from McDonald’s and have severe symptoms of E. coli, contact your healthcare provider.”

McDonald’s plans to release its third-quarter earnings before the market open on Tuesday, October 29th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today.

Earlier today (Monday), McDonald’s reported adjusted Q2 EPS of $2.97, short of our $3.05 forecast and sell-side consensus (according to Consensus Metrix) of $3.07.

McDonald’s plans to release its second-quarter earnings before the market open on Monday, July 29th. Today we publish part two of two of the July 2024 edition of our proprietary McDonald’s Franchisee Survey. As part of this, we asked our franchisee contacts to provide some commentary about the value-oriented “burger wars” – including the $5 Meal Deal that McDonald’s rolled out nationwide back in late June.

McDonald’s plans to release its second-quarter earnings before the market open on Tuesday, July 29th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today.

This morning, we published an industry report entitled “Updating our Q2 Kalinowski Quick-Service Burger Same-Store Sales Index.” We encourage you to read that report in conjunction with this McDonald’s note.

As ubiquitous as it is, chicken continues to gain in popularity in multiple ways, including with quick-service consumers. McDonald’s noted on its February 5th conference call that “Our chicken category now represents $25 billion in annual Systemwide sales, on par with beef.” This is, of course, a worldwide figure. Specific to McDonald’s U.S., beef apparently maintains a lead over chicken. But no doubt, McDonald’s is working to capture more chicken market share in the U.S.

Back on April 4th, we published a McDonald’s report looking at changes in menu prices for two different combos sold at 25 of its restaurants in California over the 2/8/24-4/3/24 time frame:

Earlier today, McDonald’s reported Q1 adjusted EPS of $2.70. This compares with our $2.70 forecast and sell-side consensus (according to Consensus Metrix) of $2.71. The Q1 tax rate came to 19.9%. This was more favorable than our 21.0% projection and consensus of 20.8%. By our math, the modestly more favorable-than-expected tax rate helped Q1 EPS by about +4 cents.

Today we publish part two of two of the April 2024 edition of our proprietary McDonald’s Franchisee Survey. As part of this, we asked our franchisee contacts to provide some commentary about the “Bigger Burger” initiative that McDonald’s management has talked about that it has planned for multiple countries.

McDonald’s plans to release its first-quarter earnings before the market open on Tuesday, April 30th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today.

This morning, we published an industry report entitled “Updating our Q1 Kalinowski Quick-Service Burger Same-Store Sales Index.” We encourage you to read that report in conjunction with this McDonald’s note.

Over the course of this week, we have previously published notes detailing menu-price increases at 25 Chipotle Mexican Grill restaurants in California, 20 Starbucks locations in California, 25 Taco Bells in California, 25 Wendy’s in California, and 25 Burger Kings in California.

Earlier today, McDonald’s and Krispy Kreme (KREM; Not Rated) announced that they “are teaming up for a national expansion. Fans will begin spotting Krispy Kreme doughnuts in their local McDonald’s restaurants later this year as part of a phased market rollout across the country. Nationwide availability at participating restaurants is expected by the end of 2026. Three of Krispy Kreme’s most popular doughnuts will be delivered fresh to McDonald’s restaurants every day. They’ll be available individually, or in boxes of six, starting at breakfast and lasting throughout the day – while supplies last.” For more info:

Earlier today, McDonald’s reported adjusted Q4 2023 EPS of $2.95, coming in ahead of our $2.88 forecast and sell-side consensus (according to Consensus Metrix) of $2.82.

Today we publish part two of two of the January 2024 edition of our proprietary McDonald’s Franchisee Survey. As part of this, we asked our franchisee contacts to provide some of their initial impressions of CosMc’s, the new beverage-focused concept for which McDonald’s opened unit #1 late last year. While this first CosMc’s was opened in Illinois, the next several are planned for Texas. (The second CosMc’s in the U.S. is apparently being planned for San Antonio.) For more info:

McDonald’s plans to release its fourth-quarter earnings before the market open on Monday, February 5th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today. Look for part two early next week.

Back on September 5th, we published a report looking at some recent currency-translation effects on McDonald’s quarterly EPS. That report included our formula for projection the currency effect on a given quarter’s EPS, and is available at:

McDonald’s hostied an Analyst Meeting in Chicago today. On the whole, we view the contents favorably (e.g., new unit growth targets above consensus, a greater emphasis on chicken, and digital investments that should continue to pay off nicely). The related press release that McDonald’s issued can be viewed at:

Following the October 7th acts of war by Hamas that included the murders of 1,400+ individuals in Israel, the official Twitter** account of McDonald’s Israel commented multiple times that it has provided free meals to members of the IDF (Israel Defense Forces). For example, McDonald’s Israel tweeted** on October 17th that “From the first day of the war, McDonald’s Israel has donated 100,000 meals to the IDF, security forces, hospitals, and the residents of the surrounding area.” (translated from Hebrew)

Earlier today, McDonald’s reported adjusted Q3 EPS of $3.19, surpassing our $3.06 forecast and sell-side consensus (according to Consensus Metrix) of $3.01.

Today we publish part two of two of the October 2023 edition of our proprietary McDonald’s Franchisee Survey. This report examines California’s AB 1228, recently signed into law:

McDonald’s plans to release its third-quarter earnings before the market open on Monday, October 30th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today. Look for part two either later this week or early next week.

Back on September 5th, we published a report looking at some recent currency-translation effects on McDonald’s quarterly EPS. That report included our formula for projection the currency effect on a given quarter’s EPS, and is available at:

Back on May 23rd, we published a report in which we looked at the breakdown of McDonald’s full-year 2023E operating income by geography. That report can be accessed at:

Earlier today, McDonald’s reported Q2 adjusted EPS of $3.17, nicely above our $2.82 forecast and sell-side consensus (according to Consensus Metrix) of $2.79.

Today we publish part two of two of the July 2023 edition of our proprietary McDonald’s Franchisee Survey. This report examines whether our franchisee respondents would like to sell Krispy Kreme (KREM; Not Rated) doughnuts in their own McDonald’s restaurants. As a reminder, back on June 29th, we published a report in which we indicated that we believe the 160 McDonald’s restaurants in Kentucky testing the sale of Krispy Kreme doughnuts in those restaurants are seeing average weekly sales of 800-900 doughnuts per restaurant. In addition, those sales appear to be highly incremental. Furthermore, an argument can be made that the sales of the Krispy Kreme doughnuts are helping to drive incremental sales of some non-doughnut menu items. For more info:

Today we publish part two of two of the July 2023 edition of our proprietary McDonald’s Franchisee Survey. This report examines whether our franchisee respondents would like to sell Krispy Kreme (KREM; Not Rated) doughnuts in their own McDonald’s restaurants. As a reminder, back on June 29th, we published a report in which we indicated that we believe the 160 McDonald’s restaurants in Kentucky testing the sale of Krispy Kreme doughnuts in those restaurants are seeing average weekly sales of 800-900 doughnuts per restaurant. In addition, those sales appear to be highly incremental. Furthermore, an argument can be made that the sales of the Krispy Kreme doughnuts are helping to drive incremental sales of some non-doughnut menu items. For more info:

McDonald’s plans to release its second-quarter earnings before the market open on Thursday, July 27th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today. Look for part two later this week.

On February 27th, Krispy Kreme Doughnuts (KREM; Not Rated) announced that “McDonald’s is bringing Krispy Kreme doughnuts to even more local restaurants with an expanded market test. Starting March 21, we’ll be serving three Krispy Kreme fan faves – the Original Glazed Doughnut, the Chocolate Iced with Sprinkles Doughnut and the Chocolate Iced Kreme Filled Doughnut – at approximately 160 locations across Louisville, Lexington and the surrounding area. The expanded test will help us learn more about operational impact on a larger scale as well as explore customer demand. And this time around, there are even more ways for fans to satisfy their Krispy Kreme craving, with doughnuts available all day in-restaurant, at the Drive Thru, via McDelivery and on the McDonald’s App.” For more info:

McDonald’s enjoyed a solid Q1 in a lot of respects, including generating +12.6% same-store sales growth in the U.S. market. On its April 25th conference call, management noted that “as far as outlook for the business, we remain very confident about how we’re positioned. We remain confident, as I said in our press release. The demand, the consumer demand for our brand remains strong. So there’s no change from our perspective in terms of how we’re feeling about rest of the year. Certainly we have, in quarter one, the benefit of lapping Omicron, and the whole industry does. We also, as I mentioned in our last call, had more favorable weather in January. So we had some things going on in January that, from an industry standpoint, made this an easier compare. But our outlook for the rest of the year, we expect to continue taking share. We’ve been taking share pretty consistently now for several years. Our outlook is we’re going to continue to take share through the balance of 2023.”

Back in March, the U.S. Federal Trade Commission (FTC) solicited comments from the public – including franchisees – regarding “Provisions of Franchise Agreements and Franchisor Business Practices.” At the time, the FTC noted that:

With this note, we take a look at the geographical breakdown of our full-year 2022E McDonald’s operating income forecast of $11.386 billion.

McDonald’s was headquartered in a suburb of Chicago — Oak Brook — from 1971-2018. For most of that time, the site within Oak Brook that served as McDonald’s headquarters was the 80-acre McDonald’s campus. In 2018, McDonald’s moved its headquarters from Oak Brook to Chicago – more specifically, 110 North Carpenter Street. That site is part of Chicago’s Near West Side neighborhood. (The former McDonald’s campus in Oak Brook is becoming the new headquarters for Ace Hardware.)

Earlier this morning, McDonald’s reported its Q1 adjusted EPS amounted to $2.63, meaningfully above our $2.40 projection and sell-side consensus (according to Consensus Metrix) of $2.33. We calculate that the adjusted tax rate came to 19.4%, which was more favorable than our 21.0% estimate and consensus of 21.0%. By our math, the more favorable tax rate added about +5 cents to adjusted EPS, relative to our estimate.

Today we publish part two of two of the April 2023 edition of our proprietary McDonald’s Franchisee Survey. This report examines whether McDonald’s U.S. should launch a Chicken Big Mac nationwide, or not. This report also provides some general thoughts from the franchisees about any topic currently at the forefront of their minds.

Today we publish part two of two of the April 2023 edition of our proprietary McDonald’s Franchisee Survey. This report examines whether McDonald’s U.S. should launch a Chicken Big Mac nationwide, or not. This report also provides some general thoughts from the franchisees about any topic currently at the forefront of their minds.

McDonald’s plans to release its Q1 earnings before the market open on Tuesday, April 25th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today. Look for part two later this week.

Back on February 20th, we raised some of our same-store sales and EPS estimates for McDonald’s, based on what appeared to have been very good domestic same-store sales trends for January and the beginning of February, helped by factors such as favorable year-over-year weather, and lapping the Omicron variant of Covid.

Along with much of the U.S. restaurant industry, McDonald’s likely enjoyed an outstanding January in terms of U.S. same-store sales, helped by various factors including (1) favorable year-over-year weather, and (2) lapping Omicron.

McDonald’s has enjoyed numerous, sizable successes over the decades. Nevertheless, our proprietary McDonald’s Franchisee Survey has – for numerous years – highlighted that at times, relations between McDonald’s corporate and the U.S. franchisee base can be strained. Of course, we are not the only sources of such info highlighting franchisee discontent — and even anger.

Earlier today, McDonald’s reported Q4 EPS of $2.59, ahead of our $2.48 estimate and sell-side consensus (according to Consensus Metrix) of $2.46. Factors helping EPS in Q4 included robust same-store sales, higher-than-expected nonoperating income, and a more favorable tax rate than anticipated. On the other hand, SG&A/Revenues came in higher (worse) than expected.

Today we publish part 2 of 2 of the January 2023 edition of our proprietary McDonald’s Franchisee Survey. This report focuses on franchisees’ thoughts as to the “Best Burger” (a.k.a. “Better Burger”) initiative – involving cooking with smaller batches of beef patties, adding onions while the burgers are on the grill, etc. — that McDonald’s is implementing in the U.S. over the first six months of the year. This report also provides some general thoughts from the franchisees about any topic currently at the forefront of their minds.