McDonald’s 2016 Revenues To Decline YoY Despite Improvement; To Pick Up Pace Thereafter

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McDonald's

McDonald’s (NYSE:MCD) posted strong comparable store sales growth in its Q1 2o16 earnings report. The company has been witnessing revenue declines over the past two fiscal years. Despite improvement in the first quarter, the company’s net revenue in 2016 is estimated to further decline.

McDonald's Q1 2016 Earnings Pic 1

McDonald's Q1 2016 Earnings Pic 2

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Trefis estimates the company’s net revenues to decline at an average rate of 4.65% YoY in the next three quarters.

McDonald's Q1 2016 Earnings Pic 3(1)

Closing the under-performing company-operated restaurants might result in a decline in annual customer count. Moreover, the promotional offers and menu price cuts might further impact the average check, leading to 6.7% YoY decline in company-operated revenues.

McDonald's Q1 2016 Earnings Pic 4 (1)

Increase in franchised restaurants, offset by a decrease in the average check, might effectively lead to a 2% increase in franchised revenues.

McDonald's Q1 2016 Earnings Pic 5 (1)

 

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for McDonald’s

 

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