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McDonald’s U.S. Comps Sharply Rebound as International Markets Lag

By Rich Duprey – Jun 16, 2020 at 10:11AM

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But restaurants are now mostly open for business again, just about everywhere.

The second quarter looks like it's shaping up to be a horrible one for McDonald's (MCD 0.65%), as the fast food giant reported comparable store sales have plunged 30% so far in the period. 

Yet it also is clear the situation is improving as its restaurants reopen, and its U.S. division is leading the way back with dramatically improved results.

McDonald's delivery app on smartphone

Image source: McDonald's.

Driving through the crisis

McDonald's says over the first two months of the quarter, comps tumbled 39% in April and almost 21% in May, leading to a 29.8% drop overall. But where international markets improved to a 41% decline from a 67% decline, respectively, for a 53% quarter-to-date shortfall, U.S. markets have roared back to life, moving from falling 19% in April to being down just 5% in May. U.S. restaurants are down 12% quarter to date.

The reason for the better domestic performance is because U.S. stores, about 99%, have largely remained open and operational, with just their dining rooms closed throughout the coronavirus pandemic.

That's not the case elsewhere, where many countries completely closed the chain down, not even allowing for takeout or delivery. All of McDonald's restaurants in France, Italy, Spain, and the U.K. were closed in April, while 70% of those in Russia and 75% in Canada were open.

As of June 15, however, almost all restaurants are operational again, such as in Italy, which now has 100% of its locations open.

McDonald's president and CEO Chris Kempczinski noted in a statement, "the unique advantages of the McDonald's System, including a high percentage of drive-thru restaurants and investments in delivery and digital, have enabled us to adapt to the changing landscape presented by the COVID-19 outbreak."

Drive-thru accounts for 70% of McDonald's business; breakfast represents 25% of sales and 40% of profits.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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