McDonald’s says some epidemic may bear consumer trends

An employee wearing protective gloves handles an order at a prototype location for the fast food giant McDonald’s restaurant that honors a 6-foot social distortion measure.

Piroश्ka van de Vuove | Reuters

McDonald’s is seeing some consumer behavior trends easily reverse as lockdowns, but the fast-food giant feels that higher delivery orders and other buying patterns will stick around long after the coronovirus epidemic.

The company reported its second quarter results on Tuesday. Shares declined 2.1% in morning trading and were said to have lost 30% in revenue during the three months ended June 30.

McDonald’s officials said its average order was large, but the total number of customers declined during the quarter. As traffic levels improve, the order size is decreasing.

“Part of it was due to mixing, so you saw that delivery became a much more obvious part of the mix during Q2,” CEO Chris Kempkinski told analysts.

In Australia, sales accounted for about 10% of sales, doubling its prior contribution to the sales mix. Delivery in the US has not yet reached those heights, although it has increased during the quarter.

“In terms of sustainable behavior, I think whether it’s kiosk usage, mobile usage, distribution usage, drive-through usage, definitely one of the things that customers are looking for more of a contactless type Experience, ”said Kempinski. “They are looking for more of a digital type of experience, one that they can navigate on their own.”

In addition to greater delivery and digital orders, consumers were also using more drive-throughs than usual. In the US, about 90% of sales came from its drive-through lanes. CFO Kevin Ozan said markets with greater percentages of drive-through lanes were recovering faster.

But there is more pressure on places around malls, city centers or travel destinations as tourism, indoor shopping and working from office buildings fall in favor of consumers. Weekend sales have lagged pre-epidemic levels, but weekday business has gained momentum.

In the US, breakfast is the most challenging time of day. Consumers are making a choice of food, cereal and frozen waffles early in the morning for a trip to the McDonald’s drive-through. Nevertheless, officials said the chain’s market share increased during this quarter, which could mean that some new customers will continue to buy their Egg McMuffins even after they resume their former routines.

The economy also plays a role in consumer behavior, and McDonald’s wants to use price deals and affordability to get an edge over the competition.

“As you move into potentially more recessionary environments in many major markets, good affordability and ensuring that a key component of your marketing mix is ​​really important,” Kempinski said.

Kempkinski said the termination of high unemployment benefits would negatively impact McDonald’s business. Senate Republicans have proposed reducing the additional aid from $ 600 to $ 200 a week. Kempczinski said he could not guess what the impact of that plan would be on sales.


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