Coalition of Franchisee Associations

April 20, 2013

McDonald's CEO Discusses Q1 2013 Results

McDonald's Corporation held their quarterly analyst conference on Friday to disucss first qauter results. Here are a few interesting excerpts.
Michael Kelter – Goldman Sachs & Co.
So your restaurant level margins now appeared to be on phase for their third straight year of decline in all three divisions and the U.S. and Europe and in Asia.  ....... how the franchisees reacted to declining profit margins at the restaurants?
McDonald's Chief Financial Officer - ...............we’re generally aligned with our franchisees around that. They understand the importance of driving traffic in this environment and taking market share, because again, if the industry isn't growing, taking market share means we’re taking the guests from other restaurants and in that environment, that is what we have to do to continue to win. Would we love higher margin? Yes. Would they love higher cash flow? Yes, but in this environment, guest count growth and market share growth are critical.
John W. Ivankoe – JPMorgan Securities LLC
Hi, thank you. Just – I think slightly different take in what’s been a pretty consistent theme overall on margins. And it’s that restaurant profitability piece that I think is interesting because it almost suggests that that you’re plan on growing restaurant profitability in 2013 in the U.S. while increasing attention on the Dollar Menu and especially increasing attention on the Dollar Menu with some of your competitor have by that definition, backed off. So that’s something that I want to get a sense of is, did franchisees push back on you saying that the 2012 store level cash flow is something that they don’t want to see go down anymore.
McDonald's Chief Financial Officer - Yes, John, actually in 2012 owner-operator cash flow was up in the U.S. .... it still going to continue to be a market share battle and we feel good at downside about our product line up and our ability to drive more sales.
This CFO guy has a bright future in stand-up comedy!
This is an informative call and it will be very educational for McDonald's
Operators..The call can be listened to on the McDonald's website. It's
only an hour long, a worthwhile experience.

1 comment:

Anonymous said...

Can't figure out for the life of me with how people are okay with running 66% gross profit? Many will out of business in the not so distant future.