McDonald's Q4 2024 Earnings Miss Estimates, Outlining Challenges and Future Strategy

Underperformance and Headwinds

McDonald's (MCD) reported disappointing results for the fourth quarter of 2024, falling short of market expectations. Revenue decreased 0.28% year-over-year to $6.39 billion, below the estimated $6.45 billion. Adjusted earnings per share (EPS) of $2.80 also missed Wall Street's forecast of $2.84.

Global comparable-store sales (comps) witnessed a modest 0.4% growth for the quarter, exceeding the anticipated decline of 0.91%. However, US comps dropped 1.4% due to an E. coli outbreak that impacted sales in late October. The company acknowledged a decline in average order value, partially offset by an increase in customer traffic.

Growth Initiatives and Strategy

CEO Chris Kempczinski emphasized the company's "urgency" to drive guest count, gain market share, and re-establish "leadership in value and affordability." The introduction of the McValue menu platform in 2025, along with new product offerings such as chicken strips and snack wraps, aims to regain foot traffic.

Key Metrics

Compared to Wall Street estimates, McDonald's reported the following for the fourth quarter and full fiscal year 2024:

Q4 2024

* Revenue: $6.39 billion vs. $6.45 billion
* Adjusted EPS: $2.80 vs. $2.84
* Global comps: +0.4% vs. -0.91%
* US comps: -1.4% vs. -0.35%
* International-owned comps: -0.1% vs. -1.22%
* International-franchised comps: +4.1% vs. -0.38%

Full Fiscal Year 2024

* Revenue: $25.92 billion vs. $25.99 billion
* Adjusted EPS: $11.39 vs. $11.74
* Global comps: -0.1% vs. -0.39%
* US comps: +0.2% vs. +0.44%
* International-owned comps: -0.2% vs. -0.50%
* International-franchised comps: -0.3% vs. -1.39%

Market Outlook

Analysts project stronger results in the second half of 2025, citing easier comparisons. However, concerns linger about the company's reliance on promotions to drive sales. Franchisees express apprehension about the potential impact on margins.

McDonald's remains committed to its value focus in 2025, aiming to attract low-income consumers and introduce menu innovations. The company anticipates expanding its chicken offerings and optimizing its marketing strategy to drive check growth while maintaining margins.