McDonald’s (MCD) fourth-quarter 2024 earnings fell short of Wall Street expectations, hampered by weak sales, an E. coli outbreak, and underperforming stock. The fast-food giant reported revenue and earnings per share below analyst forecasts, signaling challenges in a competitive market.
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Revenue for the quarter dipped 0.28% year-over-year to $6.39 billion, missing the anticipated $6.45 billion. Adjusted earnings per share landed at $2.80, below the projected $2.84. These results reflect a challenging period for the company as it navigates changing consumer preferences and operational hurdles.
Global Sales Growth Soft, US Market Declines
While global same-store sales edged up 0.4% for the quarter ending December 31st, exceeding the predicted -0.91% decline, performance varied significantly across regions. Notably, US same-store sales contracted by 1.4% year-over-year. An E. coli outbreak in late October offset positive momentum earlier in the quarter, impacting consumer confidence and driving down sales. The company noted a decline in average check size, partially counterbalanced by a slight increase in customer traffic.
International markets presented a mixed picture. Positive same-store sales growth was observed in the Middle East, attributed to the recovery from the previous year’s Israeli conflict. Japan also contributed to growth, and China showed encouraging signs of stabilization, according to CFO Ian Borden.
McDonald’s Strategic Focus: Value and Affordability
CEO Chris Kempczinski emphasized the company’s commitment to addressing these challenges with “urgency.” The strategic focus centers on boosting customer traffic, gaining market share, and reinforcing McDonald’s leadership in value and affordability. This suggests a renewed emphasis on attracting price-sensitive consumers and competing aggressively within the fast-food landscape.
The planned 2025 launch of the McValue menu platform, featuring new offerings like chicken strips and the return of snack wraps, is a key component of this strategy. The aim is to revitalize foot traffic and attract budget-conscious diners.
Detailed Earnings Breakdown: Q4 and Full-Year 2024
Q4 2024 Results vs. Wall Street Estimates:
- Revenue: $6.39 billion (vs. $6.45 billion estimated)
- Adjusted EPS: $2.80 (vs. $2.84 estimated)
- Global Same-Store Sales Growth: +0.4% (vs. -0.91% estimated)
- US: -1.4% (vs. -0.35% estimated)
- International-Owned: -0.1% (vs. -1.22% estimated)
- International Franchised: +4.1% (vs. -0.38% estimated)
Full-Year 2024 Results vs. Wall Street Estimates:
- Revenue: $25.92 billion (vs. $25.99 billion estimated)
- Adjusted EPS: $11.39 (vs. $11.74 estimated)
- Global Same-Store Sales Growth: -0.1% (vs. -0.39% estimated)
- US: +0.2% (vs. +0.44% estimated)
- International-Owned: -0.2% (vs. -0.50% estimated)
- International Franchised: -0.3% (vs. -1.39% estimated)
Looking Ahead: Challenges and Opportunities
McDonald’s faces ongoing challenges in a competitive fast-food market. The company acknowledged a sluggish start to 2025 in the US restaurant industry. The success of the McValue platform and other strategic initiatives will be crucial in driving future growth and regaining investor confidence. The company will need to effectively navigate economic uncertainty, evolving consumer preferences, and potential further health-related disruptions to deliver sustained profitability.
