Earnings Preview: McDonald's to report 4Q
NEW YORK (AP) — McDonald's Corp. reports fourth-quarter results Wednesday, which should provide a glimpse of whether a management shake-up in the U.S. and renewed emphasis on value is paying off for the world's biggest hamburger chain.
WHAT TO WATCH FOR: A key figure to watch will be sales at restaurants open at least a year, which is an important indicator of the company's health because it strips out the impact of newly opened and closed locations. In October the figure dropped for the first time in nearly a decade. It rebounded in November.
WHY IT MATTERS: After outperforming its rivals in recent years, McDonald's is facing tougher competition at home and abroad. Rivals such as Burger King, Wendy's and Taco Bell are revamping their menus, and fast-casual chains like Chipotle Mexican Grill and Panera Bread are also gaining favor because they offer food that's more restaurant-quality without having to sit down for table service.
While acknowledging the intensifying competition, McDonald's executives have also blamed the weak economic climate for a shaky performance in recent months. As a result the chain has said it plans to focus on its Dollar Menu in the U.S., as well as value meals overseas. Previously the company tried to switch customers to an "Extra Value Menu" with prices closer to $2.
Soon after announcing its sales drop in October, the company ousted the president of its U.S. business, Jan Fields, and installed Jeff Stratton, who had been serving as global chief restaurant officer.
LAST YEAR'S QUARTER: The company, based in Oak Brook, Ill., earned $1.33 per share on revenue of $6.82 billion in the year-ago period.
WHAT'S EXPECTED: Analysts on average expect a profit of $1.33 per share on revenue of $6.90 billion, according to FactSet.