McDonald’s rewrites the record books in 2021

Just over a year ago, CEO Chris Kempczinski proclaimed that McDonald’s was entering its “next big chapter.”

And he wasn’t wrong.

The burger giant’s system-wide sales rose 21% to more than $112 billion last year, a new record. Additionally, U.S. same-store sales increased 13.8% in 2021 year-over-year, outpacing the 0.4% increase in 2020. This is the strongest performance high recorded since the channel began publishing the metric in 1993, and this is the seventh year in a row. year of positive national same-store sales.

Franchisees, who make up 95% of the U.S. system, saw record cash flow, averaging $125,000 per restaurant. This puts operators at over $500,000, an increase of 50% over the past three years. The company also posted a record operating profit of more than $10 billion.

“Clearly there has never been a better time to be part of the McDonald’s brand than right now,” Kempczinski said during the chain’s full-year earnings call and the fourth trimester.

National same-store sales have largely benefited from average check growth, driven by prices of just over 6 percent in August, October and December, according to data from Placer.ai.

Same-store sales in international operated markets increased 21.6% in 2021, or 3.4% year over year, while sales in licensed international development markets increased 16.6%, or 4.4% on a two-year battery.

McDonald’s ended the year with 13,443 domestic units, a net decline of 239 locations. This includes 12,780 franchises and 663 corporate stores. Overall, there were just over 40,000 restaurants, a net growth of 838 outlets. China, which ended 2021 with 4,395 stores, saw a net expansion of 608 units, the largest of any country.

The channel forecasts between $2.2 billion and $2.4 billion in capital spending for 2022, with about 40% allocated to US operations. Globally, the brand aims to open more than 1,800 restaurants and achieve net new unit expansion of around 3.5%, the best growth rate in more than 20 years, according to the analyst firm. financial BTIG.

“While we find it a little strange that McDonald’s and other large chains are accelerating their development in the face of exorbitant labor costs and shortages, we believe these brands could see an opportunity to take more market share. small chains and independents,” BTIG analyst Peter Saleh said in a note.

Of these 1,800 restaurants (gross), more than 500 will come to the United States and international operated markets, while the remaining 1,300 will open in international licensed development markets, including 800 in China.

READ MORE: McDonald’s increases sales with larger orders and higher prices

BTIG estimates that the United States will see 150 to 200 net new locations, which would be the first year of positive growth in eight years.

Chief Financial Officer Kevin Ozan said capital spending was lower than originally forecast in 2021 for a variety of reasons, such as delays in obtaining building permits and materials. He thinks the environment is improving, but he still hasn’t returned to how he was before COVID.

“But the [2022] the advice we’ve provided regarding both CapEx and openings, we feel pretty good about both of those, but we’ll be keeping an eye on those as the year progresses to make sure they progress as we currently expect from a supply chain perspective,” he said.

In the fourth quarter, same-store sales in the United States increased 7.5% year-on-year and 13.4% year-on-year, with growth across all time slots. Menu and marketing promotions like the McRib, Crispy Chicken Sandwich and Mariah Carey’s 12 Days of Deals contributed to the increases, along with major expansion of digital channels.

Earnings in international tapped markets rose 16.8% in the fourth quarter, or 8.2% year-on-year, driven by strong performances in France, the UK, Italy and Germany. At International Developmental Licensed Markets, same-store sales increased 12.3% in the fourth quarter, or 10.1% year-on-year. The growth was partially offset by negative offsets in China due to COVID surges.

Digital sales surpassed a record $18 billion in 2021 and blended more than 25% across the channel’s six major markets. In some countries, digital represents more than 50%, such as China and France.

MyMcDonald’s Rewards, the biggest driver of digital adoption, exceeded expectations for registration and participation, Kempczinski said. After launching in the US six months ago, there are over 30 million loyal members and 21 million active users who earn rewards. The program increases the frequency by more than 10%.

About Marcia G. Hussain

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