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MCDONALDS CORP (MCD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient but muted results: revenue $6.39B, GAAP EPS $2.80 and non-GAAP EPS $2.83, with global comp sales +0.4% despite U.S. comp -1.4% tied to the E. coli onion incident; operating margin was 45.2% GAAP and 46.3% non-GAAP .
  • Management set 2025 guidance to mid–high 40% operating margin, G&A ~2.2% of system-wide sales, capex $3.0–$3.2B, ~2,200 gross openings and ~1,800 net adds; net restaurant expansion to add slightly over 2% to system-wide sales growth; FX headwind expected to be ~$0.20–$0.30 to EPS .
  • Value platform momentum: early McValue response is positive (take rates in line, $5 Meal Deal average check >$10), helping traffic but pressuring check near-term; management expects full U.S. recovery from E. coli by the beginning of Q2 2025 .
  • International Operated Markets comps were slightly positive (+0.1%) with mixed country outcomes (UK negative), while IDL comps were +4.1% on Middle East and Japan strength; system-wide loyalty sales were ~$8B in Q4 and ~$30B for FY24; 90-day active users ended FY at >175M .
  • Catalysts: clarity on U.S. recovery timeline and value execution, mid–high 40% margin guidance, accelerated unit growth, and chicken innovation pipeline (McCrispy, Snack Wraps) versus FX/tariff risks and lingering low-income consumer pressure .

What Went Well and What Went Wrong

What Went Well

  • Positive global comps and improved traffic trends exiting Q4; U.S. traffic slightly positive in December despite the food safety headwind .
  • Strong progress in value and marketing execution (McValue, EDAP menus, meal bundles), with $5 Meal Deal driving >$10 average check and loyalty engagement; CEO: “We’re playing to win… outstanding value, exciting menu innovation and culturally relevant marketing” .
  • Strategic tech and digital scale: 90-day active loyalty users >175M; FY loyalty system-wide sales ~$30B (Q4 ~$8B); management targets 250M users and $45B loyalty sales by 2027 .

What Went Wrong

  • U.S. comp sales -1.4% on E. coli-linked onion incident; check was negative while traffic slightly positive, pressuring near-term mix and margins .
  • UK comps negative and competitive pressure in breakfast; management cited need for stronger marketing and family engagement; Savers platform and £5 meal bundle introduced .
  • Non-GAAP EPS down 4% YoY to $2.83, with higher other operating expense, interest expense, and tax rate; FX a headwind and consumer softness among low-income cohorts persisted .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$6.49 $6.87 $6.39
GAAP Diluted EPS ($)$2.80 $3.13 $2.80
Non-GAAP Diluted EPS ($)$2.97 $3.23 $2.83
Operating Margin (GAAP, %)N/A45.3% 45.2%
Operating Margin (Non-GAAP, %)N/A46.7% 46.3%
Net Income ($USD Billions)$2.02 $2.26 $2.02

Segment revenue mix (franchised and company-owned):

Metric ($USD Millions)Q3 2024Q4 2024
Franchised Revenues – U.S.$1,851 $1,794
Franchised Revenues – IOM$1,781 $1,706
Franchised Revenues – IDL & Corporate$461 $458
Company-Owned Sales – U.S.$822 $780
Company-Owned Sales – IOM$1,485 $1,434
Company-Owned Sales – IDL & Corporate$349 $95
Other Revenues$124 $120
Total Revenues$6,873 $6,388

KPIs and comps:

KPIQ2 2024Q3 2024Q4 2024
Global Comparable Sales (%)-1.0% -1.5% +0.4%
U.S. Comparable Sales (%)-0.7% +0.3% -1.4%
IOM Comparable Sales (%)-1.1% -2.1% +0.1%
IDL Comparable Sales (%)-1.3% -3.5% +4.1%
System-wide Sales Growth (YoY, %)-1% (cc +1%) 0% +2%
Loyalty Sales (Quarter, $USD Billions)~$7 ~$8 ~$8
90-day Active Loyalty Users (Millions)>166 —>175

Non-GAAP adjustments:

  • Q4 GAAP EPS $2.80; gains/charges of ~$0.03 per share yielded non-GAAP EPS $2.83 (down 4% YoY) .
  • Q4 impairments/restructuring net impacted operating income and other operating items; non-GAAP operating margin 46.3% vs 47.1% prior year .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating Margin % (Consolidated)FY 2024 / FY 2025FY24: mid–high 40% FY25: mid–high 40%, above FY24 adjusted 46.3% Maintained high level; FY25 targeted above FY24
G&A as % of System-wide SalesFY 2024 / FY 2025FY24: ~2.2% FY25: ~2.2% Maintained
Interest Expense YoYFY 2024 / FY 2025FY24: ~+11% FY25: +4% to +6% Lower increase expected
Effective Tax RateFY 2024 / FY 2025FY24: 20–22% FY25: 20–22% Maintained
Capex ($USD Billions)FY 2024 / FY 2025FY24: $2.5–$2.7B FY25: $3.0–$3.2B Raised
Gross Openings / Net AddsFY 2025—~2,200 gross; ~1,800 net; ~4% unit growth New detail
Unit Expansion Contribution to SWSFY 2025—Slightly over 2% (cc) New detail
FX EPS HeadwindFY 2025—~$0.20–$0.30 New risk disclosed
Free Cash Flow ConversionFY 2025FY24 target ~90% FY25: low–mid 80% Lower near-term on investment cycle
Quarterly DividendQ4/Q1$1.77 declared (6% increase in Sep-24) $1.77 declared Feb-6-2025 Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Value platform (EDAP, bundles, $5 Meal)Identified value gap; $5 Meal pilot strong; planning holistic platform $5 Meal extended; brand value perception improved; mix uplift via marketing McValue launch early positive; $5 Meal average check >$10; traffic leading check Improving execution; near-term check pressure
U.S. food safety (E. coli)Not material to Q2; later incident acknowledged Incident began Oct; swift action; recovery plans Impact localized; trust back to pre-incident nationally; full recovery by beginning of Q2 2025 Recovery progressing
Chicken portfolio (McCrispy, Chicken Big Mac, Snack Wraps)Scaling McCrispy; chicken share gains Chicken Big Mac activation; strong demand Chicken Big Mac pulsing; U.S. Snack Wraps returning; new chicken strips Continued innovation
Digital & loyalty166M members; 25% SWS; target 250M ~$8B quarterly loyalty sales; global campaigns >175M 90-day users; ~$30B FY loyalty sales; ROA rollout Scaling users and sales
International markets (UK/France/Germany/Canada/Spain)Value programs evolving; pressure in France UK/France under pressure; Germany/Canada progress UK still challenged; France sequential improvement; Germany/Canada share gains; Spain strong Mixed; improving in select markets
GBS / efficiencyInvestment phase; benefits later Emphasis continues Peak investment 2025–2027; qualitative benefits (time-to-hire -50% in AU) Investment now; leverage later
Macro/low-income consumerDiscriminating spend; value necessary Industry contracting; low-income pressured Low-income still down double-digits; sluggish QSR start to Jan Persistent headwind
Beverage/CosMc’s——Ongoing test learnings; smaller units with drive-thru perform better Experimenting

Management Commentary

  • CEO: “Global comp sales decreased 0.1% for the full year… comps up 0.4% in the fourth quarter… In the U.S., comp sales were down 1.4% for Q4 amidst the impact of the E. coli outbreak… we expect to have fully recovered by the beginning of Q2” .
  • CFO: “Adjusted earnings per share were $2.83 for the quarter, a 4% decrease compared to the prior year in constant currencies… CapEx for the year was just under $2.8 billion… free cash flow conversion… below our expected 90%” .
  • CEO: “We’re moving forward with agility and urgency, getting back to guest count and winning share… McValue provides consistent, compelling value… we’re excited about Snack Wraps’ return” .
  • CFO: “2025 operating margin percent to be in the mid-high 40%… interest expense to increase 4–6%… effective tax rate 20–22%… capex $3–$3.2B… ~2,200 openings, ~1,800 net adds” .
  • CFO: “FX may be a full-year headwind to 2025 EPS totaling in the range of $0.20 to $0.30” .

Q&A Highlights

  • Value/margins/check: Early McValue take rates in line; $5 Meal Deal drives >$10 average check; breakfast strong; buy-1 add-1 offers accretive checks; near-term mix/check pressure expected to improve with food news overlays .
  • U.S. recovery timeline: Impact now localized (Rocky Mountain region); trust levels recovered nationally; full recovery expected by beginning of Q2 contingent on execution of value and marketing .
  • IOM color: Sequential improvement in France; strength in Canada/Germany/Italy; focus on UK/Australia where performance is below potential .
  • Unit growth: ~2,200 gross openings in 2025; ~70% of wholly owned openings in IOM; new units showing low–mid-teens first-year returns; path to 50,000 restaurants by end-2027 .
  • Beverage strategy/CosMc’s: Tests continue; learnings suggest smaller units with drive-thru are better; exploring in-store beverage enhancements vs stand-alone footprint .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2024 were not retrievable due to data access limits at the time of this analysis (SPGI Daily Request Limit exceeded). Values would normally be sourced from S&P Global; as they were unavailable, we do not present consensus comparisons here.
  • Actuals: Non-GAAP EPS $2.83 (GAAP $2.80), revenue $6.39B; comps +0.4% total company; these form the baseline for any subsequent estimate revisions .

Key Takeaways for Investors

  • Near-term: Expect Q1 2025 to be a low point with sluggish industry traffic and value investment; management targets full U.S. recovery by the beginning of Q2 and traffic-led comp improvement as food news layers on value .
  • Margin setup: FY25 mid–high 40% operating margin target above FY24 adjusted 46.3% implies franchise margin durability and modest company-operated margin uplift despite cost pressures .
  • Growth drivers: Accelerated openings (~1,800 net adds), digital/loyalty scaling (>175M active users), and chicken innovation (Snack Wraps, McCrispy) support volume and mix recovery .
  • Risks: FX headwind ($0.20–$0.30 EPS), tariff uncertainty not embedded in guidance, persistent low-income consumer softness, and competitive value intensity in UK/Australia .
  • Capital allocation: Elevated capex $3.0–$3.2B to build pipeline and openings, dividend maintained at $1.77 per share, ongoing buybacks; FCF conversion guided to low–mid 80% during peak investment years .
  • Trading lens: Watch monthly U.S. traffic/check progression, UK value/messaging improvements, and Q2 confirmation of recovery; upside if check turns positive with chicken/news overlay; downside if value dilutes margins longer or macro worsens .

Citations: All data and quotes are sourced from McDonald’s Q4 2024 8-K and press release, Q4 earnings call transcript, and prior-quarter materials as cited in-line.