McDonald's (MCD) results missed the mark to end 2024 as the fast food chain faced an underperforming stock, lackluster sales, and an E. coli outbreak.
Revenue at the fast food giant for the fourth quarter decreased 0.28% from a year ago to $6.39 billion, missing expectations of $6.45 billion. Adjusted earnings per share of $2.80 was also lower than Wall Street's estimate of $2.84.
Global same store sales for the quarter ended Dec. 31 were up 0.4%, compared with an expected decline of 0.91%. But US same-store sales were down 1.4% year over year, as an E. coli outbreak offset momentum in late October. The burger chain alluded to a decline in check growth, offset by slightly higher guests count.
Many on the Street hope the fourth quarter results are the "low point in recent history for the brand," as Citi analyst Jon Tower wrote in a note to clients.
In 2025, McDonald's aims to regain foot traffic with its McValue menu platform and new offerings in the form of chicken tenders, strips, and the return of snack wraps.
Here's what McDonald's reported for fourth quarter results, compared to Wall Street estimates, per Bloomberg consensus data:
Revenue: $6.39 billion versus $6.45 billion
Adjusted earnings per share: $2.80 versus $2.84
Global same-store sales growth: +0.4% versus -0.91%
US same-store sales growth: -1.4% versus -0.35%
International-owned same-store sales growth: -0.1% versus -1.22%
International franchised same-store sales growth: +4.1% versus -0.38%
Here's what McDonald's reported for the full fiscal 2024 year, compared to Wall Street estimates, per Bloomberg consensus data:
Revenue: $25.92 billion versus $25.99 billion
Adjusted earnings per share: $11.39 versus $11.74
Global same-store sales growth: -0.1% versus -0.39%
US same-store sales growth: +0.2% versus +0.44%
International-owned same-store sales growth: -0.2% versus -0.50%
International franchised same-store sales growth: -0.3% versus -1.39%
And January was another tough month for McDonald's, despite optimism around the McValue platform.
"It sounds like January was not a good month across the board, mostly driven by really poor weather in every region, snow, extreme cold," BTIG analyst Peter Saleh told chof360 Finance. The conditions make it difficult to assess whether the value menu drove incremental foot traffic.
Ahead of the earnings report, TD Cowen's Andrew Charles said he'd be looking for company-operated stores' margins and any impact from the value offerings.
Net income fell 1% to $2.02 billion during the quarter, and was down 3% for the year to $8.22 billion.
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Franchise operators had hoped that the McValue platform would lure in customers, offsetting any hit to margins.
"There may be a margin challenge where we are providing food at a great value, but if we can bring more people in, then it will take care of that. That's our goal," McDonald's franchise operator David Costa, who operates 18 locations in Florida with his father, told chof360 Finance prior to the McValue launch in January.
Any forward-looking commentary will also be top of mind for Wall Street.
"We think it's a back-half-weighted year for 2025 for McDonald's," said Charles, who rates the stock at a Hold.
Wedbush analyst Nick Setyan, who has an Outperform rating on the stock, shared a similar anecdote.
"The comparisons get so easy in the second half that even if they fumble through the first half ...[McDonald's is] still going to have [a] positive, constant recovery story in the second half," Setyan told chof360 Finance on the phone.
Saleh, who has a Neutral rating, said franchisees are worried about the overdependence on promotions.
In January, the buy one, get one offering makes up a mid-teens percentage of sales and the $5 Meal Deal accounts for low-double digits, plus franchisees are also offering in-app promotions, per his note to clients.
"When 35% of your business is now on steep discount or free, [it's] hard to really make a lot of money on that," Saleh said."[It's] going to be tough to wean the consumer off of that and bring them back to kind of more profitable type products."
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Brooke DiPalma is a senior reporter for chof360 Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
