McDonald’s profit misses estimates as restaurants limit services

Fast-food company says about 75% of restaurants are operational

Photograph:  Naomi Baker/Getty Images

Photograph: Naomi Baker/Getty Images

 

McDonald’s missed Wall Street estimates for quarterly profit on Thursday as most of its restaurants limited their services to delivery, drive-thru and take-away to curb the spread of the coronavirus pandemic.

The world’s largest fast-food company said about 75 per cent of its about 39,000 restaurants around the world were operational as of Thursday, including almost all of its nearly 14,000 restaurants in the United States.

The company said it had resumed operations in a majority of its restaurants in China, where the virus was first detected late last year, although demand remained low as consumers had not fully returned to their routines.

“The global crisis caused by the Covid-19 pandemic has significantly disrupted our business, and we continue to operate in a very challenging and unpredictable environment,” chief executive Chris Kempczinski said.

The burger chain had pre-announced a 3.4 per cent fall in first-quarter comparable store sales earlier this month, with US sales rising just 0.1 per cent powered by strong demand before the pandemic.

In March alone, global comparable sales fell 22.2 per cent, the company had said in early April.

Shares of McDonald’s, a Dow 30 component, were marginally down before the opening bell. The stock has lost about 5 per cent so far this year.

The health crisis, which has infected over a million in the United States and killed about 60,000, has forced government-led lockdowns, bringing dine-in businesses for several restaurants to a halt towards the end of the first quarter.

Earlier this month, McDonald’s withdrew its outlook for the year, joining other restaurant chains, citing uncertainties related to the health crisis and its impact on the global economic conditions.

Net income fell to $1.11 billion, or $1.47 per share, in the first quarter ended March 31 from $1.33 billion, or $1.72 per share, a year earlier.

Analysts were expecting a profit of $1.57 per share, according to IBES data from Refinitiv.

Revenue fell 6.2 per cent to $4.71 billion, but were above Wall Street estimates of $4.65 billion. – Reuters