Strong US sales give McDonald’s a boost in 4th quarter

Mcdonald's revenue fell to $5.3 billion in the fourth quarter, according to reports. PHOTO CREDIT: Wilfredo Lee

McDonald’s ended 2020 on a strong note, recovering nearly all of the global sales lost in the pandemic despite a resurgent virus.

But it was costly to get there, and the fast food giant fell short of Wall Street’s earnings and sales expectations for the fourth quarter. Revenue fell 2% to $5.3 billion, below analysts’ forecast of $5.4 billion, according to FactSet.

McDonald’s said marketing spending was higher than usual in the fourth quarter because of the launch of a new ad campaign. The company also said it faced higher-than-expected costs to close underperforming restaurants, including around 200 in the U.S.

McDonald’s same-store sales —— or sales at locations open at least a year —— were down just 1.3% worldwide in the October-December period despite store closures in Italy, Spain and Germany. Sales moved into positive territory in key markets, including the United Kingdom.

U.S. sales were the biggest bright spot, pumped up by new menu items like spicy Chicken McNuggets and a meal deal collaboration with Colombian singer J Balvin. U.S. same-store sales rose 5.5% in the October-December period.

McDonald’s fared better than some other U.S. chains throughout the pandemic because nearly all of its locations have drive-thru windows.

Same-store sales were down 7.7% worldwide for the full year. That was lower than the 7% drop analysts had forecast. McDonald’s said U.S. same-store sales were up less than 1% for the year, making 2020 the sixth consecutive year of positive U.S. same-store sales growth.

Net income fell 12% to $1.4 billion for the fourth quarter.

Adjusted for one-time items, the Chicago fast food giant earned $1.70 per share. That was short of Wall Street’s expectation of $1.77, according to analysts polled by FactSet.