McDonald's 3rd quarter

Sales almost like 2019 and a new strategy

Drive-thrus are part of McDonald's new growth strategy.
Imago Images / Waldmüller
Drive-thrus are part of McDonald's new growth strategy.

On a global scale, McDonald's managed to raise its System Sales in the third quarter to the level of the same period in the previous year, but after adjusting for currency effects, they slipped slightly into the red. With the new MCD growth strategy, things are set to continue to improve. These were the key findings of the company's quarterly report.

In the case of System Sales, the US domestic market was even up 4 percent in the third quarter compared to the previous year (4 % in constant currency). Stagnating to negative developments in the international markets (IOM 0 %, in constant currency -3 %; IDLM -9 %, in constant currency -7 %; abbreviations see below) ensured zero growth (-1 % in in constant currency). For the year 2020 to date (January to September), McDonald's has recorded an overall decline in system sales of 10 % (9 % in constant currency).

In absolute figures, McDonald's System Sales recorded around USD 23.6 billion for the third quarter (own sales USD 2.3 billion, franchise USD 23.6 billion). From January to September, the company reported 67.4 billion dollars (own 5.9 billion dollars, franchise 61.4 billion dollars). In 2019, McDonald's broke through the $100 billion mark for global system sales for the first time.

Comparable Sales: Positive in the USA

The company reported a slight recovery in comparable sales in advance. Overall, comparable sales are 2.2 percent below the previous year. In the second quarter this figure was still -23.9 percent. In the domestic market USA, Comparable Sales even increased by 4.6 percent from July to September. Although there were fewer guests in comparison, average receipts rose and the number of group orders increased.

McDonald's: Comparable Sales 3rd Quarter

Quelle: McDonald's
 USA4,6 %4,8 %
 IOM-4,4 %5,6 %
 IDLM-10,1 %8,1 %
 Total-2,2 %5,9 %

In the International Operated Markets (IOM), which include Germany, France and Great Britain, the figures recovered during the quarter. Nevertheless, the picture was mixed, depending on consumer behaviour and the respective government regulations.

Comparable Sales, Like-for-Like etc.
Sales on existing space, also known as Same Store Sales, Comparable Sales or Like-for-like Sales, are considered by experts to be the "hard currency" of the industry. Here, changes in system sales are considered from all locations that are open for at least 13 months. The reference figure is the same period of the previous year.

New strategy for new growth

In addition to the quarterly figures, McDonald's presented the new growth strategy "Accelerating the Arches". This strategy is to be based on three pillars, which the company describes as MCD for short:
  • M for Maximize our Marketing In the future, marketing efforts will focus more on how McDonald's is established and presents itself locally. For example, the new "Serving here" campaign will focus on the company's values and the company's interaction with communities, guests, suppliers and franchisees. Furthermore, a new packaging design is being introduced worldwide. In addition, McDonald's wants to focus on its price-performance ratio again.
  • C for Commit to the Core McDonald's emphasizes the importance of the core products on the menu, such as Big Mac, Quarter Pounder, Chicken McNuggets or French fries. These account for 70 percent of sales and the focus is to be on these products, which will be improved step by step. For example, with new rolls or a new technique for grilling meat. McDonald's is also committed to the increasing demand for chicken products. For example, a new crispy chicken sandwich is to be launched in the USA next year.
  • D for Double Down on the 3 D's (Digital, Delivery, Drive Through) These are drivers that have become increasingly important during the pandemic. For 2020, McDonald's estimates that digital sales already account for about 20 percent of system sales. The new digital platform "MyMcDonald's" with improved ordering processes and new loyalty programs is scheduled to be launched in six top markets at the end of 2021.
    The rapidly growing delivery market has also benefited from the crisis. In the past three years, McDonald's has nine-fold the number of restaurants offering delivery to around 28,000 restaurants (out of a good 39,000 worldwide). Now the company wants to invest in customer experience and improve operational processes.
    Drive-Thru counters are also among the big winners in the pandemic. Here, too, processes are to be improved, for example with automated ordering and express lanes for digital orderers. In addition, the company is working on a restaurant concept that only offers delivery, drive-thru and take-away. In addition, most new restaurants in the USA and IOM are to have a drive-thru counter.