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Fast-food chain McDonald’s (NYSE:MCD) fell short of analysts' expectations in Q2 CY2024, with revenue flat year on year at $6.49 billion. It made a non-GAAP profit of $2.97 per share, down from its profit of $3.17 per share in the same quarter last year.
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McDonald's (NYSE:MCD) Q2 CY2024 Highlights:
- Revenue: $6.49 billion vs analyst estimates of $6.63 billion (2.1% miss)
- EPS (non-GAAP): $2.97 vs analyst expectations of $3.07 (3.2% miss)
- Gross Margin (GAAP): 57.3%, in line with the same quarter last year
- Same-Store Sales fell 1% year on year (11.7% in the same quarter last year)
- Market Capitalization: $181.6 billion
Arguably one of the most iconic brands in the world, McDonald’s (NYSE:MCD) is a fast-food behemoth known for its convenience, value, and wide assortment of menu items.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthMcDonald's is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 4.2% over the last five years was sluggish, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, McDonald's missed Wall Street's estimates and reported a rather uninspiring 0.1% year-on-year revenue decline, generating $6.49 billion in revenue. Looking ahead, Wall Street expects sales to grow 5.7% over the next 12 months, an acceleration from this quarter.
Same-Store SalesMcDonald's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 7.4% year on year. With positive same-store sales growth amid an increasing number of restaurants, McDonald's is reaching more diners and growing sales.
In the latest quarter, McDonald's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 11.7% year-on-year increase it posted 12 months ago. We'll be watching McDonald's closely to see if it can reaccelerate growth.
Key Takeaways from McDonald's Q2 ResultsMcDonald's revenue unfortunately missed analysts' expectations on weak same-store sales. Its EPS missed Wall Street's estimates as well. Zooming out, we think this was a weak quarter, showing that the consumer may be shaky. The stock traded down 1.6% to $247.99 immediately following the results.
