McDonald's announced on Tuesday that almost 30 percent of its quarterly sales plunged as pandemic shutdowns outside the United States dealt a heavy blow on the company's revenue on its main menu.
Although recovery has been comparatively more robust in the U.S., recent spikes in COVID-19 infections have prompted some states and cities to reimpose restrictions to contain the virus spread. Consequently, McDonald's gave no outlook for its future results.
The Chicago-based burger chain posted a massive drop in global same-store revenue and fell short of profit projections as the group's restaurants were closed down because of the pandemic, significantly cutting operations to only drive-thru and delivery. Shares of McDonald's plummeted over 2.5 percent and settled at 196.24 on extended sessions, Tuesday.
Global same-store sales were down 24 percent in the second quarter, pulled down by large international markets including France, the United Kingdom, and Latin America. Market observers had estimated a 23.25 percent decline, according to IBES data from Refinitiv.
Of the burger network's 39,000 restaurants around the globe, 96 percent are now back in business, compared with 75 percent at the beginning of the second quarter. Comparable-store revenue that fell almost 40 percent in April plummeted only 12 percent by June.
However, the recovery is not as balanced as some markets are, like Japan and Australia, sales are already being registered ahead of 2019. In China, sales fell. In the U.S., McDonald's applied the brakes, suspending the reopening of dining rooms early this month as cases of the virus grew.
McDonald's net income reached $484 million, or 65 cents a share, down from $1.52 billion, or $1.97 per share, in 2019. Its adjusted earnings per share of 66 cents came way off the FactSet consensus for 74 cents a share. Sales of $3.76 billion were down from $5.41 billion in 2019 but ahead of the FactSet consensus for $3.70 billion.
During a conference call with investors, executives issued a cautious tone but disclosed that July revenues in the U.S. have improved and should settle moderately positive for the full month.
According to McDonald's chief executive officer Chris Kempczinski, in many markets worldwide, most notably in the U.S., "the public health situation appears to be worsening," Amelia Lucas quoted the CEO as saying in her CNBC report.
Nonetheless, Kempczinski said he believes that the second quarter "represents the trough in our performance as McDonald's has learned to adjust our operations to this new environment," the report added.