OAK BROOK, ILL. – McDonald’s Corp. US comparable sales rose 4.6% during the third quarter of fiscal 2020. While strong, the growth could not offset the challenges the quick-service restaurant chain faced in other parts of the world. Overall, comparable sales fell 2.2% during the quarter.
“We started the third quarter with nearly all of our global restaurants open for business, and they remain open today,” said Kevin M. Ozan, chief financial officer on Nov. 9 during a conference call to discuss third-quarter results. “However, with the (virus) resurgences … there are numerous instances of government restrictions on operating hours, limited dining capacity in most countries and in some cases, mandated dining room closures.”
Net income for the quarter ended Sept. 30 totaled $1.76 billion, equal to $2.35 per share on the common stock, an increase over the same period of the previous year when McDonald’s earned $1.61 billion, equal to $2.11 per share.
Sales for the quarter fell 2% to $5.42 billion.
“US comparable sales were up 4.6% with positive comps in each month of the quarter, including low double digits in September, marking our highest monthly comp in nearly a decade,” Ozan said. “Sales comps were also positive across all dayparts for the month of September with continued strength at dinner.”
While McDonald’s results are recovering when compared to performance during earlier stages of the pandemic, Ozan said he expected restaurant “starts and stops” to be the likely operating environment for as long as the virus is present.
“Given the safety measures we’ve put in place and the operational changes we’ve made to adjust to this new environment, we believe we’re well positioned to successfully navigate through it,” he said.
Net income for the first nine months of fiscal 2020 was $3.35 billion, equal to $4.47 per share, and down 25% when compared with the first nine months of fiscal 2019.
Sales for the period were down 13% at $13.89 billion.
People notice when McDonald’s announces menu changes. The world’s largest fast-food chain’s Nov. 9 announcement it would be testing a plant-based burger option in some global markets in 2021 and that the burger would be just the beginning of a menu platform called McPlant sent ripples throughout the marketplace.
“We have created a delicious burger that will be the first menu option in a plant-based platform we are calling McPlant,” said Ian Frederick Borden, president of International for McDonald’s, during the company’s annual Investor Day. “McPlant is crafted exclusively for McDonald’s, by McDonald’s. In the future, McPlant could extend across a line of plant-based products, including burgers, chicken substitutes and breakfast sandwiches. And we expect some markets will test the burger next year. We are excited about the opportunity because we believe we have a proven, delicious-tasting product.”
Christopher J. Kempczinski, president and chief executive officer, said McPlant will be a global core menu option franchisees may access if there is a customer demand opportunity.
“They can do it as a burger, they can do it as a chicken product, they could do it as a breakfast sandwich,” he said. “So, there’s a lot of flexibility there at the market level because we know that different markets are going to be at different stages around the development of plant based.
“So, I think what we laid out here today was a framework for all of you to understand how we’re thinking about plant-based. We have an equity that we’re going to now drive over the long term around McPlant. But the exact pace of that is going to be dictated as it always is by customer demand and how quickly customers are looking for McDonald’s to offer that product.”
In September 2019, it was announced McDonald’s and Beyond Meat Inc., El Segundo, Calif., were testing a plant-based burger in Canada called the PLT (Plant, Lettuce, Tomato). During a conference call with analysts Nov. 9 to discuss Beyond Meat’s third-quarter results, Ethan Brown, president and CEO, declined to specifically elaborate on what Beyond Meat’s role in McPlant may be.
While calling his company’s relationship with McDonald’s “really strong,” he added “I don't want to get ahead and insert ourselves to the point where we’re dominating the headlines at their Investor Day. So, I respect their decision to refer to the big plant platform in a generic sense.
“We are working very closely with them on a number of matters. And I think that folks just have to continue to be patient. But I feel, as I said in the past, good about that relationship and good about what we’re contributing to the McPlant platform.”
Alex Jarman, a research analyst with Euromonitor International, which has US offices in Chicago, said the introduction has major implications for the fast-food and plant-based food industries.
“In recent years, chains such as Burger King and White Castle gained a competitive advantage against McDonald’s by introducing plant-based options on their menus,” Jarman said. “Vegan and vegetarian consumers may have avoided McDonald’s in favor of chains with these options. The McPlant line could lure these customers back to McDonald’s in addition to the growing number of consumers who occasionally incorporate plant-based foods into their diet. By creating stronger options for these consumers, McDonald’s is opening a new channel for future sales growth.
“The McPlant line will also significantly impact the market for plant-based foods. Many fast-food chains have introduced plant-based options in recent years, but most of these have been partnerships with Impossible Foods or Beyond Meat. Fast-food partnerships, from KFC to Dunkin’ to Qdoba, have been key drivers of these brands’ national growth. McDonald’s decision to create its own plant-based line raises the question if other fast-food chains will eventually do the same. Whether that happens or not, the introduction of a plant-based line by the world’s largest fast-food chain will certainly challenge these brands’ dominance of the plant-based market.”
Sabina Vyas, senior director of strategic initiatives for the Plant Based Foods Association, San Francisco, said the announcement further cements the plant-based industry as a mainstream part of the American diet.
“Retail sales of plant-based foods are way up, especially during the pandemic with more people eating at home more often, yet, when people dine out or go through the drive-thru, they want plant-based food options available there, too,” Vyas said. “We’re glad to see McDonald's joining other fast-food chains like Burger King, Carl’s Jr., Dunkin’ Donuts, Starbucks, and many others in adding plant-based food options to their menu — it is the smart move for McDonald’s to meet customer demand, and we welcome them to the plant-based foods industry.”