McDonald’s net profit in 2024 will fall by 3%, continuing to increase the value of the China market, and plans to add nearly a thousand new restaurants during the year

Photo source: Visual China

Blue Whale News, February 11 (Reporter Sun Yu)On the evening of February 10, McDonald’s (MCD:US) released its 2024 full-year results report. Data showed that annual revenue was US$25.92 billion, a year-on-year increase of 2%; net profit was US$8.223 billion, a year-on-year decrease of 3%; diluted earnings per share was US$11.39, a decrease of 1%.

Data shows that as of 2024, the number of McDonald’s restaurants worldwide is 43,500, and the number of restaurants has increased by 4% year-on-year. Among them, the number of restaurants in the China market exceeds 6800, a net increase of about 900 from 5903 at the end of 2023.

Global same-store sales fell 0.1%

As a global catering retailer, McDonald’s has 43,500 restaurants in more than 100 countries around the world. According to McDonald’s official website, 95% of McDonald’s restaurants in the world are independently operated by local franchisees. McDonald’s entered the China market in 1990. In 2017, McDonald’s China transformed into a franchise market, and CITIC Consortium became the controlling shareholder.

The financial report shows that for the full year of 2024, McDonald’s global same-store sales fell 0.1%, of which the U.S. market grew 0.2%, the international operating market fell 0.2%, and the International Franchise Market Division (IDL) same-store sales including the China market fell 0.3%.

It is worth mentioning that focusing on the fourth quarter, McDonald’s global same-store sales increased by 0.4%, of which the U.S. market fell by 1.4%, the international operating market increased by 0.1%, and same-store sales in the international licensed market segment increased by more than 4%.

At the earnings conference, McDonald’s CEO Chris Kempczinski talked about the reasons for the decline in same-store sales in the U.S. market in the fourth quarter of last year. Affected by the E. coli incident, relevant food safety issues have basically passed and are expected to be fully recovered in the second quarter of this year. rdquo;

In addition, he said that the 2024 results did not meet the company’s management expectations and believed that the results will return to normal in the next few quarters.

Talking about future performance growth, McDonald’s Chief Financial Officer Ian Borden said in a telephone conference that it expects the full-year operating profit margin target for 2025 to be higher than the adjusted 46.3% in 2024.

In 2025, it plans to add nearly 1000 new stores in the China market

Talking about future store opening plans, McDonald’s said it plans to add about 2200 new restaurants in 2025, of which about 1000 will be added in the China market, which means that nearly half of the new stores are located in the China market.

Judging from the layout of McDonald’s stores in the China market, narrow-door restaurant data shows that more than 70% of stores are located in first-and second-tier cities. Industry insiders pointed out that McDonald’s restaurants have a coverage rate of less than 40% in third-and fourth-tier cities. In the future, they can sink the market through key layout and reduce marginal costs through scale.

From the perspective of supply chain, according to McDonald’s China CEO Zhang Jiayin, McDonald’s has made huge breakthroughs in the supply chain, with 90% of its ingredients purchased and produced domestically. At the same time, the data and IT teams have also achieved 100% localization, providing strong support for McDonald’s China’s digital transformation.

It is worth mentioning that in the fierce competition in the catering industry, McDonald’s has also chosen to cut prices. At the China Fan Conference in December 2024, McDonald’s said that it will increase its value-added discounts in 2025, including matching 1+1 year-round resident plans and quarterly updates.

Judging from recent price cuts, on December 9, 2024, McDonald’s adjusted the pricing of delivery fees from 9 yuan to 6 yuan; on the first day of construction in 2025, McDonald ‘s launched an event to drink fresh coffee for free for seven consecutive days starting from February 5.

In the eyes of industry insiders, the price reduction strategy is the reason why McDonald’s revenue will increase by 2% in 2024, but net profit will fall by 3%. Although price reduction promotion has stimulated consumption, profit margins have been affected to a certain extent.