McDonald's (MCD) 30 Apr 202020 Q1 Earnings call transcript

Hello, and welcome to McDonald's First Quarter 2020 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded.

Following today's presentation, there will be a question-and-answer session for investors. [Operator Instructions]

I would now like to turn the conference over to Mr. Officer Corporation. Relations Investor Cieplak, for McDonald's Mike Mr. Cieplak, begin. you may

Officer, and you morning, are us. Chief Executive With Ozan. Good Officer, President Kempczinski; joining Kevin Financial Chief morning me thank this for everyone, and call on and Chris the

non-GAAP that remind our reconciliations apply earnings those also their forward-looking statements our documents measures Both Web of comments are on financial are I release everyone in any today's X-K on and site, on want as call of GAAP the corresponding to today. available filing to our mentioned the call with measures.

remarks we and most queue. and then limit this yourself Following one, you a prepared please I preference first question, one than morning your if queue questions. for ask the your to you re-enter have open that ask more will please

is is conference replay our Web call Today's webcast via being being for site. recorded also and

now, And Chris. it to I'll turn over

spending of business, how Thanks, we'll toll morning. Would good imagine of be want this I but has portion a acknowledging COVID-XX start pandemic. to Mike, the good by human discussing call impacted and today's our

has our and express professionals, responders, of particular, risk affected world the and their lives people want help inside essential put In own communities impacted and crisis heartfelt this me and who healthcare at have to Let sympathies everywhere. been to McDonald's The by extend to around workers I gratitude virus. deepest to thanks those outside other first global who have others.

and offering Where been possible challenges, open system and and the responsible, disruption. widespread McDonald's our made In stay change members, food franchisees, amidst of affordable, I'm safely proud and McDonald's company to we've for they've of entire tireless the immensely employees. face continue convenient it to and such great-tasting, suppliers, of able enormous efforts the crew

world around to in the to mid-March, decline That and of we adversely experienced strong our that our in coronavirus Since significant expect after due by performance Velocity business QX we to major carried over then times history. February. Plan created quarter, business operating outbreak X.X%. different for a a into these persist has momentum our and pandemic, disruption experiences the the down take comparable crisis Turning and the results impacted Growth XXXX. in Beginning now global like changes developed sales our a is world, January XX-year we've over. strength in long performance. We're the our drove we the completely these from our In resilience now dragging

most, came pressures great Entering threatening crisis. this shape. our While we're situation into not advantages competitive we better was system we crisis the community, our strengthen positioned believe to the that the immediate global following immune will than and our in we

or addition markets our at XXXX. franchisee in McDonald's In most of were cash record to in major highs balance flows strong sheet, near

expertise are had estate during us. McDonald's and through and restaurant proven significant capabilities deep modernized, have also business new pandemic. navigate global been our scale, largely to unmatched in strengths operational delivery the to and we'd digital significant footprint, critical to Our made be now global for build crisis. investments We be the proving to that

China, new Specifically, around and of These practices to best with a we shared then crew many hundred others solutions a contactless presence positioning markets, countries enhance safety. learned with guides operations and globe. how move along our able through customer delivery. and adjust to developed outbreak. we've quickly different in to piloted the We develop were as the been over In began, insights the phases outbreak where

markets. As their Group each these quickly Solutions are innovations Global all country shared own develops our Restaurant by across

advantage incredible across has operations significant our during size also proven be ability supply XX,XXX Our to restaurants The been to adapt chain of a has see. and this system's to crisis. quickly scale

and with sourcing we've our supply business globally. no sense team recognition XXX or materials, to despite for had for want operate vital particular other toys, I scale some or team in date, our solutions give food, we give the such supply PPE supply chain over equipment, to which break disruption packaging logistics, any chain materials, you has as sourced masks. global million the of To masks just To or guidelines. and serve In workers, our of system, other customers moment. nearly distancing needs professionals, to healthcare first the their to each safely meet to virtually social all to the while strong open Drive-thru, and of locations us McDonald's are the millions has mandates McDonald's of essential course, development day of to customers U.S., XX% allow adhering have responders, continued for McDonald's Drive-thru looking serve

have and open. able safely Canada Similarly, to remain Australia been

pre Finally, not versus I should significantly delivery COVID. up sales global are that our

think Our restaurant an is partner our from brand further and financial we we every this operator. for expectation opportunities in be essential extend capitalize make third-party our it's any franchisees footprint wherewithal operate. love the leadership our to market the do where for that can our its on customers' we system. have Once To emerge us essential available will McDonald's to that crisis this

several liquidity our taken financial licensees franchisees and we've steps developmental to strength. reason help that and For maintain their

through continue difficult decisions along temporary in a to be the and targeted, will way, support, Kevin financial providing which timely, there few will we While are walk minutes.

a their remain and us was reopening our value restaurants Berlin, safely seen brands seeing showed Mac items. prolonged to a of this to also we've seeking cities we where familiar some the perspective, where to we're comfort after began disruption learnings China, slowly lives focus week. able of our been convenience. customers in and that reflected Big known Northern core and France encouraged like menu believe in and also Tokyo, in We're open, routines. will promotion, response In be customer a recent customers daily iconic Chicago, are last this lead heightened From early craving by that on in We've our

in McDonald's Similar the and mentioned we'll Canada, safety a of limited I grounded for we world. many tasting European our our challenging on a items is fast. will around markets focus best time. in menu core in so efforts food great This and this did will phased what's primarily and markets, our focused crew. earlier, As for serving we customers be reopening on our has serving we what and what well U.S. unpredictable in be reopen when in done decades: Through countries to the

we the Kevin Looking what March. as a the at we full talk worse comparable in have experienced sales, month about whole second seen than month April. expect for be the of quarter to of significantly will what we

of we As in late things believe closed March. have reached stand, through we number of in restaurants terms the

trajectory near of highly uncertain is for dependant recovery, the the exact future. planning our limited however, of in on testing, of availability reopenings are our as in We markets the factors of overall a such outside wave backdrop. infection, and and mandates, many economic risk second government the The control

We of are developing wide a contingency scenarios. variety plans for

XX,XXX China well revert of in and experience will our know not that pre-shutdown as we opening restaurants in as EOTF experience from our back remodel to program their immediately customers closing routines. as our From part the U.S., do

asset, adapt. our precious testing of we can to am that customer know we remain their has safeguarding continue even our and customers. we business example, efforts. know core apparent is exhibited The markets, a been, the the confident will strength closely Whatever both be challenged with support we markets, safety during first marketing that Each most McDonald's cadence reflect is and judgment value people our reignite will our and be can new be the trust risk. momentum, world. a and our last customers. to is breakfast will the the to scientific most and element remarkable XX operational We as in leaders a focus McDonald's For priority emerge know a coronavirus to that We that of ease. due and favorites years so government and know these at we critical crisis developed on never menu and system, various has will and reengage recovery market will rebuilding have widespread be the to central that familiar necessary will broader and interest put and we both the day more reopening over into on focus be element our I we a as calendar but others, expert aligned post of We learnings the health many part. brand the before we

now turn to first talk over our it to I'll quarter Kevin about results.

place in the Thanks, of to world experienced reflecting Chris. of and significantly COVID-XX mid We through began and around traffic the when benefit in comp government line we others in March, momentum. shifted as to operations parts Global XXXX top with X.X% limited of sales closed restaurants world impact the temporarily the and strong decline Beginning restriction countries to strong consumer most shelter in many began year. some leap performance up due guidelines. were February,

a as perspective the March, in through of sales Comp comp had on this April to In down result, markets takeaway closed month and temporarily April market hours sales Today, March beginning XX% as have XX% the were past restaurants, walk months. segment and drive-thru several Australia, for of are sales of through Germany operated how have March. reopen. down sales all and menus. of and provide over down X.X% comp markets International and Italy, second-half roughly fully Canada, the closed As delivery down few other be markets progressed France, limited U.K. and will month XX% quarter. global comp the like the in for to the the I just first were and now continued trends to like XX% down comp only were March Spain, sales many in about

U.S., mid in XX% comp consistently mid Beginning down negative XX%. and the for March March. continuing comp U.S. about month the to through Turning were were of April, sales sales

see we the some in couple weeks. have begun However, to of last improvement

This mix takeaway of the significant with well to sales nearly operating April impacted in seen when the several also all about for transactions surprisingly, to on Also all leave as the weekdays restaurants as U.S. and COVID-XX, across check in sales in channels. expect has experienced their channel evolving are sales impact more houses XX%. behavior fewer we've the increase average accounted an the part. drive-thru only consumer over consumers the sales weekends of order day the routines daily has party down about in a by weeks, U.S. Not two-thirds be delivery breakfast is than We due as as and interrupted size Prior only. at the a all increase drive-thru seen shift U.S. necessary, comp last and

seen we've As U.S. digital and other delivery We're transactions channels, China drive-thru trends to nearly XX% these ordering to in-person in all in for from sales restaurant, uptick also per consumers of are and of similar in accounts an what now shifted drive-thru and the markets. delivery seeing and

Comp down comp March segments more sales down the XX% for of International License month sales Developmental the in segment even the significantly the were other were in to March, of similar second-half COVID-XX as were reflecting restaurants all the end approximately it spread had of impact closed By segments. throughout restaurants substantially of February. in early reopened. of In the March, the XX% China,

a since late the initial consumers market continues the demand routines, However, their to not negative returned pre-COVID experience outbreak reduced have in as level sales resulting fully January. in of to comp

Comp to in quarter, negative the have April sales mid-teens. over down were improved trends XX% and first in

new In the in China. confident in opportunities development, remain XXX restaurant terms new over restaurants We growth opened unit of in China quarter.

the are want most due that corporate the financial timelines results, on expect some franchisee our including through of be P&L, relevant we impact on I to flow the to liquidity and considerations crisis. However, to to understanding areas delayed to transition health. COVID-XX

nature as sales into less Starting tap margin designed fixed in line. more with is the franchise comp the sales, become current our through flow bottom business efficient results last cost over structure model local franchise the Inversely, owners our to we franchise to of In strong as words, we've the environment top see years, through a bottom several line and the in line. other flow to grow, dollars. operating the declining entrepreneurial for conversion of the of of spirit to growth our heavily P&L, business

variable Our company in expenses areas as such are paper operated more labor costs. and and restaurant food

the So, margin to current in restaurants the dollars in better flow a environment. is bit our through company operated

about For to million, declined franchise with comp closures. number restaurant dollars. March margin of the dollars decline decline with Most negative significant IOM by due the of perspective in of our the of segment total was margin sales a in $XXX driven restaurant XX% XX%, temporary the

cancellation million relates constant the Turning including an increase to last of we about to G&A, versus million of two-thirds XX% first saw increase reduced the spend year. $XX About $XX currencies costs, restaurant certain in scope biennial $XX and payments million of non-recurring convention of quarter or R&D in technology. our of obligations the for we related worldwide work ongoing to contractual and as roughly

costs of to remaining amortization depreciation acquisitions increase with Apprente, run continued our as and associated The to well relates technology. the Dynamic costs as and Yield related

reminder, both XXXX. these quarter to first a subsequent As of acquisitions occurred

not lapping we're those So acquisitions yet.

Our give a customers serving how more These pay and business, Dynamic their to customers business think choice about as already investment enable remains food in receive priority and in digital results. and engagement investments this benefits mentioned unprecedented we I we've of crisis. will they and as beyond flexibility seen during operating in our order, us this our remain time, important the in for customer digital our before, Yield

spending projects This that includes areas re-scope and delaying as all terms As redirect and we waters, the implemented executed to can we're benefit in some near-term, will initiatives other both and and uncharted and the be or cost a focusing dollars taking reasonably we of decision-making. in priorities. navigate to on priorities reducing reviewing We're also investments the long-term. approach resources through system time, disciplined and for in

these the make prioritize we the business. assessments, needs most of our critical resources As we'll against also

to section of well. a as we sales other expect $XXX about COVID-XX, expected of on operating XXXX as result activity the Gains are the few a for down restaurant million lines sale impacted restaurant be of the to rest P&L Due the minimal be to in year. of

have is that and down some crisis we expect of flow preserve and to of all reserves March. rent the affiliates this to to down and flexibility. significantly financial royalty debts cash with strong balance substantially, is to expect we of be bad for to taken operating The entered our a be sheet year. earnings to this a actions we've and We additional number deferrals subsequent related result equity Our of expected

billion our In billion in immediately. various billion early at March. to We addition March, upon credit issuances financing reviewing $X.X currently that program drew $X a we new in $X.X suspended and we our including secured of debt costs, G&A share repurchase new of maturities, of line

taken future capital new We as the groundbreaking spread. began development and openings to of terms suspended expenditures, around the to experience the very approach a activity. COVID-XX restaurant In we've in world of practical U.S.

decisions of majority capital some have are typically or full-year that our Given spend for first XX% year. we for projects quarter on the and of plan the the is hold, CapEx about delayed now many our flexibility with

want spending As first dividend. we're dividend the of initial impact I a March of result, expectation about reducing our our our We also beginning the prior of XXXX at by $X COVID. widespread acknowledge our billion dollars billion. paid from to $X.X to quarter

our capital strong the financially in growth investing business for shareholders. our McDonald's prioritizing remains and priorities allocation dividends to and remain

utilize the ensuring our will financially judicious We grow and manage focuses to funds on to continue that strong. our able a remain franchisees company business in manner is and the

ensure the in developmental a financial the running to number actions partners earlier, successful a and world be of company that to mentioned our position and licensee to sound put in position businesses. a franchisees their around taken I As in we've is

step their that to quick needed deferrals around our franchisees quickly we providing As world, maintain concerns COVID to of in various procedures, the of position countries, rent financial all decisions mentioned. in quickly others I've markets, and spread because within in form best broad and them temporary royalty determining were make was limited restaurants businesses. the franchisee and assistance the resulting generally by was put alleviate applicable to to operations liquidity That in closures as based and operating followed some all first

the most partners so of deferred in to across we March our collected rent deferrals system. on This markets earned and assistance collection licensee developmental May. the liquidity April is in and April around franchisees of impact and month in Cash cash billion amounts and that royalties one a we've the world. lag, committed $X roughly of Generally, the occurs deferral these to

also where to terms suppliers to franchisees We and with necessary. lenders, closely payment distributors extend work

projection the liquidity This and into of by Now the provided takes various and organizations. specific company, of liquidity scenarios, and sales the assessment risk impact and assistance franchisee measures licensee includes suppliers, lenders financial we're assessing at account health developmental governments.

regarding support objective assistance further decisions consistent a may how for framework specific making franchisee developed and will We've need liquidity and ensure all to organizations and may them. which markets. help equitable approach an across we deal making This of our decision

have As that financial health Chris been for mentioned, franchisees continue strength our to assistance general advantage years, of philosophy post and the we competitive a expect be COVID-XX. McDonald's our targeted, and timely, to for temporary, for and

Now, back Chris. I'll turn it to

Thanks, Kevin.

course don't crisis of ensure will actions know are we the pandemic, emerge the about strength. taking much we of is this in necessary this future position to there from While we a

we to have including will these unprecedented ahead, will aftermath level is know remain about the Looking way business, maintaining think our of changes the customers businesses, of about strong in fundamental strategy the COVID-XX. to ours also some operate. constant times What beginning our trust bring in to commitment our the

will to adjustments there While updates elements Growth provide on progress look and need to to in of the the continue likely important, for time, in be year. further Velocity our Plan changes, later making real will be overall we'll

operate. In offering world and us protect to communities all. with the free their showcase middle two-week workers examples packaged I'm These in efforts proud note the first in proud thank thank to true our and a feed stories. show banded our the and and you provided times appreciation include purpose to boxes meals. In and our we've The the has of together of I'm menu to these of of our items the U.S., impact You community. foster Happy to already stayed this healthcare share system responders restaurants to breakfast countless the favorite nearly meal handful in lunch this tireless are for which Meal four real McDonald's of toy. You Thank way we inspiring around place challenging immensely these a in a We're million Thank appreciation, of in boxes, has with them

customers use shop many frontline are and added drinks, to need. for enabling communities Europe we coffee milk, safe a a responders We've to to McDonald's COVID to and efforts. within reopened the eggs, X.X home on many easy in and our nearby contactless masks providing redistributed world of Australia, shop, the free markets frontlines. feed relief restaurant Drive-thru in Across In organizations at Madrid, the and we've meals around communities serve the of workers just solely providing In to staples menus first is to way nearly healthcare and nonprofit hospital. and to takeaway basics, food customers bread that food being extra through donated million banks supply local and also call chain for to the workers

with crisis earlier solid said entered this I a foundation. we

challenges, to While significant ability we done confident face years we've adapt success. we throughout secure disruptions and as our to XX in long-term our remain our

Q&A. begin we'll now, And

Thank Instructions] you. [Operator

morning. Good

David first is Evercore. with from Palmer question Our

Thanks and good morning.

like international your other from April, diverged markets. trends So in it in the far, seriously U.S. has sounds

type walk-in just focusing would So on also stores, COVID but those be would linger. more that factors might that obviously closed vulnerable of there weakness to those and structural I formats, other international like lot be economic might and higher been mix, markets, that a imagine has

especially it's as about strong as you're reopening? the dig you support to to into see the do markets U.S.? in about in give And Thanks. get the things as hit snapback been you hardest offering markets? can comment those in how us back And a sense So franchisees, those perhaps look you that can you

the on in Thank the David. our are based markets for Europe, that have closed Morning, in a countries right, in mandates. completely international, of government particularly we you And number you're question. IOM

reopening process the beginning in of a a those number just are on limited We basis of markets.

when we've a overall start to the probably really little going by I us premature encouraged been it's any demand. so to you do would restaurants give we is of open to limited what the be, for And say but indication trajectory

markets our You we in may restaurants, to get as we've Drive-thru. wait last in opened France, week, at few people had have of a in the one three-hour for through of these the a seen, up

that overall In a Austria, to looking as we familiar I to markets convenience very, brands to into view favorites, to to powerful. really two had is our are value very also this orientation start people Drive-thru. is And line of have And return key think also that toward a we elements. open I two-mile up desire are that known think fact strong get and the I think the

are like too to like able in We level everybody optimistic. we, I demand are else, going and feel customer so be. share markets, overall watching be well soon certainly that, that think are what positioned is do those closely to to we're We to We take expecting going but the on say. probably of we're

support In address. we're to Kevin terms pass let franchisees, of it over me financial to to that providing

broad-based say the to Yes, months we've what rent for kind really was royalties hey, At in couple U.S., generally the around did this the deferring franchisees I'd similar Related about David. as to most of my franchisee and remarks. world. of it's a assistance, that in talked beginning I what the done assistance was we

to is other rent sales. that's thing based our converted The variable rent essentially we've on happened

only is been each they of other thing paying point out the that assistance aren't I The have don't government restaurants have there's sales. rent So different country. because forms would effectively closed in various

employees been of in not have pockets to are while if to assistance been work. markets several the workers countries places certain means that So with franchisees temporarily, in out actually able actually even been able markets of working effectively then workers of we've find of to franchisee's working that in help payment but the keep And aren't able some doesn't other kind related who closed. their to the more to where they've being companies terms which restaurants come provide the

closed. companies we for of couple provide employment [Ph] temporary them restaurants a are others [Aldi] and to partnered in like with up our workers So our while

where broad-based, to at and Again, may say and wouldn't internationally our both is need that the organizations different assistance side. at individual the we looking step now in in, see U.S. I international started on the we to substantially we're So

question with Our next from Charles Andrew Cowen. is

And and Great, all you are sheltered. hope thank I you. staying safe

the crisis sales have would proven XX% I Thanks. into improved, the home, a you to that the could you international from attribute It been amid XX% improvement we're outside there in seems strategy a to the around back from seeing down that of the more consumers resume want the Has to contributor? domestically, into about the a it month-and-a-half half best practices far improvement? first-half you are part U.S. COVID-XX. learn lean been markets down stimulus is value that to comfortable the that or that of digital the month. that What you're Now checks would more to thus implementing result April advertising? the call of growing like into as What venturing of maybe more and

Yes, hey, Andrew.

let maybe it in me pieces take So two there. different

and often, a And providing best we've procedures sanitizing made we really how that are of changes how barriers, we're global are I customers. dedicated protective positioning think environment our safe different to there operations adjust and XX Group masks, frequently they've Solutions And understand sure we to as how almost teams guides, included, everything things. market a learned the to our in around more. practices. variety we learned to of every crew have the practices, reviewing procedures, In where operate, from and the to U.S. terms meeting operating just case to other lot things that of surfaces; we make Restaurant connected are the for a these daily U.S., for best it's like our different in

that as for both be in continue So well restaurants crew. just our us has our safe sure terms making environment as for a really that been to helpful of customers for

I seeing. think the that with demand that we're certainly does help

could I helps, think checks. you as ability a our way, people to food that get to a there but certainly attribute to offer safe benefit that stimulus I is confident the in about continue think

to I to bit think brands. desire familiar out to as are little more, customers also, this probably venture go a starting really there's

it saw at-home the in grocery familiar as were -- the You from home. the benefited of away occasion, in in staying or center brands really people store,

dynamic looking be that people for out familiar at same think as I play brands. to going to come is start

think but of more I we've play U.S., in variety So the been encouraged the we've by at weeks different U.S. what certainly in there's a the see last things there of couple

Gonzalez Our with next Eric question is KeyBanc. from

Hey, thanks, hope doing is and everyone well.

franchisee to is loads also need health the the public, quite have lot understand current the the happened cash in detail and And past like of big the I limit but topic, what's you've their operators to to increased you the it what environment, franchisee a some remodels tech So, seems tell cover in on given flow. significantly and upgrade.

other you So quartile but the from table. question think to some And to be options is, failing? deferrals alluded are rent prevent the and enough this bottom some I royalty the in of your franchisees in prepared remarks, there may

assistance those And PPP for the for your franchisees? what what Act actually those then qualify there? to about secondarily, able could be would relief, regarding you stores the if say So Cares troubled might you and government Thanks. proportion of talk be some

the give think just of the Kevin about, Yes, we and terms in so handoff Kevin philosophy to phase more details, but this wanted I'll then of any move with speed. first essentially crisis, what I talk sort talked of

deferrals And into broad-based sure as our to And was did did from referenced. so both Kevin just, out phase, make system our what that a that well the suppliers of what liquidity. we system, sufficient why was that just in as a that the pushed had initial lot we liquidity

variety a this in through essentially under are will, what more have recovers. of able stress business had a been you tests, and how if go organization, of needs of we sense do terms time, as think for to we've Now, their we've franchisee and developed every different liquidity scenarios single

that will support dealing of think of scenario important the timely, provide Kevin in we're the when targeted, what temporary that and the apparent is that talked about we I it's the point is terms principles with.

at So risk. but tools is go, a element on our depending of that? disposal to trajectory certainly And say of, timing to have if progresses, that's suite of to we I then any knows anything the want how would you sense but address situations, which full have who be going the which a is add at we this to we who Kevin,

add high of our just I'll in remind a with we I or bit. guess, to Yes, XXXX would little most major markets either our in come at of everyone one, that did I most franchisees just in than flows, in came so there most strong say, all-time markets year good that To others. highly more your are cash the near leveraged, some position. are some I'll point, into franchisees pretty

the organization and discussions Chris' having certainly we So And point by that to and Or et they're further think at of and cetera. assistance. those are looking we step now point, may from seeing need are the where with at they all franchisees. suppliers, appropriate organization, getting where need provide the assistance that cognizant sure are to we we're in I lenders, make

Related would to I eligible to guess They're everyone operators for are small are kind business. our advisors I who of just independent with their determine for kind of their the needs remind loans. owners business the loans, the working

businesses. we're to they've running that working is able enable got that been understanding and their to most liquidity would certainly keep paying Our crew them keep businesses. to to with And them approved, their running make to then sure the which get have continuing continue and their

they about assistance I So comfortable franchisees, if think few a feel need. will there but in they that need to pretty how further about we be just get general think certainly

David with from Baird. Tarantino next question is Our

of Hi, good or the might Is part helpful. bucket how into I run? well. short you system in terms any second quick ask how example, shape the the wanted question flows burn there everyone to of what additional up my last can If cash that share to anyway comment. think rate you is offer of maybe Hope to Thanks. that to fall need would quarter, the follow-up to those will franchisees then, the for a you in many of second related metrics doing percentage cash category And the morning. Kevin, there's really just would is of for assistance? be

a or majority not of it large pretty that, Thanks, but few David. in piece small operators. operators percentage. we're a leave a that large I'll It's percentage, operators Sure. working each it's This is It's maybe small market at generally with. the a a of

position isn't my it important of -- strong mentioned strength. grade I flow try widespread we the but let and I investment a always some and have repeat go Related a been with. from to remarks, the in So we remember certainly that context, that rating. to That's a things us. issue From crisis entered may and back put dealing in we're corporate standpoint, obviously me some of a and just we're credit cash I'll financial

and I franchisees entered the that, our So we've about also pretty strong into talked maintaining financially. year been

position, and the we quickly credit cash a of billion of new business of committed in got line As year, would of our which of the and and was about billion seen around conditions of billion. of and growing, anticipation impact then also this line we world. full bolster secured to that $X.X certainly acted We $X.X pretty $X credit, the into billion COVID macroeconomic have $X.X to was financing you have in still changing access we March, a bonds of

is topic we cash balance untapped again, We line first still needed our billion sheet, on in little access we the of if have discussion $X billion liquidity and ever balance our based markets. keep should on cash certainly to cash of get but remember, ability that $X.X We further a of need the confidence do quarter, have current we credit a So, frequent lately. ended if we that's it. over I our position eye and on our our in know burn that,

right royalty now G&A for as the the cash is the XXX restaurant quarter of you we I'd individual operator inflows than know, say those that, fairly countries. second and outflows We've those less $X variable in of normal. further. given and things between Having the costs capital like may and our temporary said deferrals in and now this will consistent over operate lease we're over certainly in looking that month-to-month and need all inflows because are deferrals, be big organizations cash something expense some cash that at significantly billion, our closures rent

most likely countries reopen seeing now, we're flow again, we're would to the third free second in the ability their but negative and those right on to that in and back schedules flow the turn pay the in of So we have cash can assuming continue have the expect assuming franchisees that and royalties, that to are cash free to European quarter. markets, the positive rents the quarter, would

So third around we now turn positive do to back but a in plans, to think quarter second be rougher right that current we would on quarter. will quarter the in of flow, terms based expect cash

Sara question next is Bernstein. with Our Senatore from

before wanted more COVID-XX. bit about ask the trends Thank sales you. emergence I to both after and of a

January was then easier color quantify maybe could that year-over-year U.S., bit ticket delivery pandemic, of had a does a try U.S. just global delivery guess have out you you would about balanced noted the been, some the haven't could what you in traffic presumably orders after? digital, of I after between and give in before So, sales February, you might before so traffic drive-thru in you some well and of little as understand in a more for effectively, and just drivers the emergence account or context the positive little talked about share have that talk in comp while, if growth and I being or been the digital just and even bit in on significant, up carry ordering, sales to

Sure.

strong through get very part results start. So U.S., with the did to the team U.S. of The a the really your February. about was question excited on first off we

New was year. that trends the for benefits We seeing leap over traffic As by the two the months year, a were through Year encouraged really got X% we you the -- traffic. due good that to of that amount and know, extra the first were excludes we entering and we then that were into up of

we rest through. terms So first we've in of working of of then, were Year been kind position we in there further that COVID and in the U.S. helps and had a from couple Leap what the traffic through good the months

add? The delivery business and thing anything Kevin, is U.S., drive-thru. significantly, thing that standpoint, you I important know a from drive-thru still if our through so, driving you the is driven is else in don't think really channel predominant I predominant not while is want up the is business. it's the our to the vast delivery the majority have of

right we the the say up even the market to like our and -- more but Canada, certainly delivery seeing now, around we in our thing XX%, than mentioned, U.S. dependent certainly business penetration of markets times. it pre-COVID Chris are drive-thru seen sales of it have and U.S. drive-thru, world the from XX% I'll the U.S. No, so, both some the of delivery and but and about as some certainly two-thirds has for markets example, from part is it's up are on sales the of sales gone digital in then up seeing

is Our next question from Bernstein Jeff Barclays. with

very you much. thank Great,

-teens. I could for through Just mid context you good Wondering the of more than down It to mentioned historical monthly trend historical down said but you if pace was like get COVID, some timeframe. XX% of seems now of means China a in like February that the is give terms to trying it you the perspective sort trying market, think some intelligence, just comp whatever maybe assess January, in seems is crisis. recovery a from some

point slower months, it like so seems but it's than maybe it's like a five summit seemed it multiple So plus hoped. over improvement,

quickly the Just instead is like if looks the much wondering U.S. maybe you improving. more can out primary factors list

down think I it's it now the you month and April XX. within said XX, just adapt started

compare and can we be think and you. about the U.S. of how China in recoveries you around between Thank terms great? anything the world the contrast So would

Sure.

described you as as in watching call. certainly things We've and of there operational a of that China been has around side learning learning is So approach lot I been we're is from think the the digital have was there business. to A it of I - earlier mentioned, number also the China. able elements that

I in of they think terms of ahead they than how further use most are our markets digital.

the trends year of as not in were improving, China V-shaped seeing ago. still as a as recovery a to a lot pace business been has we've slow. but running are China. good, recovery you We're we referenced The negative well, mentioned, where in So, of but they're

are a is there noting think couple that worth for things two that. I as just reasons

substantially we were in had The closed, to that first fully reopen. restaurants more then is and have China

to So that's you're just moderating then larger if and able channels. open, disruption of a your kind be to than continue

was that one So issue.

that that businesses drive-thru the an you for one so to strength XX% anything certainly seen our would as else Kevin, added have get market I penetration, second restaurants is That's add? when have drive-thru, we strong drive-thru bounce only have think a just business, your The a that and reminder China, and I a to want benefit. penetration, of ability things in the say of you of real back.

There I weekends, consumer are which say trends, to biggest think we're those similarly, as quicker are two the out things. I'd again, start than go recover are some weekdays seeing that people holiday travel, other as to get reduced etc. then, still like things could into vacation, recover by is little impacted parts, and that obviously, slower we than breakfast be day summer, a

drive So remained big much fully in and me restaurants China closed those certainly got the the some open, is U.S. The a more trends point. difference of the but we've to Chris's while. similar, for that through to consumer restaurants are in are whereas

with Stanley. John is Morgan Glass Our next question from

Thanks and good morning.

anecdotes varies, trends, the those On I And and if questions, there's do make or U.S., of that's breakfast? clear want just what a for couple those be critical the stores China not Drive-thru sure math, just are talking what know just to of is one comp IOM that comp to then can differentiator the comment. in IOM we the of are in Kevin, your percentage closed, know, it in You a for the example, but average are percentage there, and dividend some you're drive-thrus, clarify trends an but have about to the and markets? what markets

acknowledging mean around under that you're making in clear review, just said your not you that about Thanks. review dividend. the under decisions said that? it's Does You the it's what dividend or

from are to government every with so happened at start markets market, staying still activity, just different even reflecting open, difficult people in open. situation overall can the markets. just comment the I conclude It home, just a I the mandates, lower that to of I'll still to a economic that comp mean, So remain overall IOM down, down generalize. are what's in comp tough largely think based that on is generalize Certainly, level European you orientation say market of that able an in that is about I've are to in got restaurants

again, So is restaurants is adversely even trends, comp it open that varies that in but really affecting market-by-market. that are

think. I

in Drive-thru. The restaurants, you your our majority market-by-market, restaurants our it about but second Europe, percent have primarily question, the majority of restaurants is of which then there vary have again, do have Europe, that If go In Drive-thru. does Drive-thru? focus to have I'll

other So be certainly emerge helpful out over is something of that Kevin, to expect we to flip And I'll you. the that we questions this. to us as then Yes.

and that's prioritizing is the includes the I'm to we investing saying capital dividend, what reiterating business John weren't priorities, know our is to allocation dividend which supporting in I'm Related growth, which Yes, for necessary our shareholders. franchisees the important because

second process the recommendation the normal just that dividend. quarter later Our to of because quarterly provide timing is for in quarter a board the will

process ongoing normal process. that's our would or that the point. next and board our recommendation at It's process month this we so that so to for the dividend, still we go So the with haven't our intact changed that

RBC. with Carril Chris from is question next Our

Hi, morning, for thanks the question. good and taking

remodels? a to soon this you as delay largely So as to the about timing please thought on the this makes franchisees were any more them that have pipeline EOTF franchisees those the just the how reduction of $X this year? a beyond are remodels you are up billion in what provide CapEx year? the detail remaining you detail complete on thinking flexibility Can additional Thanks. talk in feasible seeking or process the year, bit about some Is can on domestic for and

Yes. Thanks for question. the

that projects. $X of chunk we're Part those said dollars. we've projects to year. by U.S. or a billion roughly of of substantially really this experience So our future CapEx We've that that the for going reduced reduce

doing as to point, keep keep those. franchisees feasible those, to continue your that of as will to reasonably soon I many on it's the want going to view Now,

gotten continue those some We requests have even already some to franchisees projects. for

want I for and but dollars expect and operating, a their I rightly those would restaurants the would close franchisees, substantial lot invest the pushed go before I'll back say more into a So to also. of normally, they to understand think get so, is period business of that time XXXX,

at They're partly piece you a were also a for now. the of in just period closed U.S., about We again, many time if countries, that's some of So back of restaurants getting the a now up operations, and running to disruption think outside and right opening maybe a do right because new the reducing it. been the openings markets those the now they've thing of going there. quicker of for so, normal and the pace of franchises lot probably isn't

we So up, that markets. easy in those pace continue will think still of I relatively for opportunities to most growth that's slow see in certainly again, picking and but XXXX,

term lot long isn't change in in of opportunity, a pause the is for So, that. XXXX but it it a

is Miller Sandler. Regan Piper with question from next Nicole Our

you Thank And day even situation. then is not, the forward? Paris you. if cases of Good so of how for What now? this ask And as then wanted what I expect if part streamlining U.S. thinking going doing you in clearly to and I but And clarify very please it that current the different some it's been limited much. are mix particular, for be? prior in permanent the you Thank about could different learnings? strategy think menu be just had to might the reason to morning. a where it this that if you today,

and learnt Hi, which to what we've what reopening learnt. that's is so consistent we then I breakfast of the It's and whole through the guess will future relative down It's we consistent seen first like parts, day other consistent experience easy one take Nicole. is with with I process. the with markets have in closing China. have everything Yes, the

we the down then… breakfast to is that other parts ordinarily day So, and have, relative

Menu.

interesting and menu, Yes, limited question. been it's it's a good and

the other in menu well limited to number U.S. a gone have markets. we as of So, as

items. on does provide is to maybe that margin, it's think you opportunity it things was we but the this at balance immediately back us cetera? sort you go Or, of a that want everything add some thinking safe each sense market-by-market market et more were of about standard but to where ease, and say to going back of of I things markets a that or some make to menu? do So, not to between is of I that maybe that is probably back that in right I do way operational the point does menu, think one this the a say are more go pre-crisis items to the as get be decision, all would to back of way to all an speed thinking go revert about staged every service we

on So, stay tuned that.

is next Katie from with Goldman question Sachs. Our Fogertey

more the yesterday Great. into heard hope going to and be the then competitive I breakfast part. point well, and are from of dive the Thank bit take a to menu franchisers everybody there it in little to day is off lot you, wanted within dynamics of detail. is now as and sense, franchises breakfast We allowing a competitor that small yours that makes right

people's landscape, return how So, contextualize disruptions how prioritizing you that the you. hopefully Thank routine? was and you competitive work? thinking there around normal about as people are And back you are the to if any of recapture hoping and sensitivity opportunities I economic the marketing seen could breakfast, to

Sure.

we part we fair phase, going is are be to into it's a say critically us. breakfast the getting us, recovery think -- back as at start to for business I for breakfast and is really get day to so, critical

business trying we effort the time. mix, to of take overall those disruption and time, on but the takes The breakfast that against and putting back that. sure business. of is our are lot a a be get so, to we part great routines. breakfast going make does are very Reestablishing plan think make it we routines It's a point to aggressive I breakfast is to we be

next Our is JPMorgan. question with from John Ivankoe

we some Hi, thank were operate. made be regarding are perhaps changing should There in the way you. comments that that you

you, further and will G&A to relatively change alluding that's that think to near used perhaps going be you or as that the reporting are what offices kind exercise I this coming spend could it in to the structure how a to new if of of term. regardless, and is have have your much maybe near-term a changes catalyst overall but considered CEO assume over and words that's I some you potentially longer-term? just this organizational and the structure, Chris, lines, think about or the potentially obviously, go is you I feel the you you make have

geared how Yes, those more that. think toward as need operate midst the this that think I restaurants, to the we restaurants talk we about I make -- around how crisis, how of about differently operate think of is was and operating really in It's been things So our many permanent? differently. how intent after we the how changes was we we're we the really stay about when our operate comments

about need in my playbook as that plan kind of and got business going is is, talk part to team We've other are say my I enduring, work plan, think world usual. point and we're not just as post-COVID growth and the adjustments on on about velocity so, resume and our really to are going it's There in to to kind and great pick and be to to in I build up we strategy over crisis, as of planning mentioned is this and velocity going that that expect going but come year the the and I of start different of you fair coming back those through probably Your of to world. We'll months you are that. the to more this thinking next with that insight continues, which what so, look all did the going point foundation what doing formulate of remarks, view out work be though, determine give growth several a we're our changes. we many into we changes to to later that, of

is some resources. John, G&A, We're investments. certainly add reallocating only are reducing our I'll spending, reviewing some delaying or The thing we on

think but we the we're us $XX as cost have, us few far of same things our non-recurring the doing at do cancellation the kind have we about people we expect our I convention worldwide mentioned, a scrutinizing as costs, million. also as I certainly would So spend, have time, of that to that

obligations likely about as have some related we cost stopping work, dynamic needed will us we $XX of an that to and million our then reduced pay contractual our a be people R&D to openings, openings, some where million be $XX capitalized that and are able have another We there's unusual will for costs restaurant million, cost we also capitalized. to to $XX of costs less those restaurant us of That G&A. portion

Now it's that's accounting of because cash, additional paying but not capitalized it been folks may on G&A those have of where in the were developments. end would up we instead them, where it already,

things offsetting some got on year. for the in we've So, G&A going

good everybody you day. us. Have conclude a will That call. for Thank joining the

conclude McDonald's Corporation This participating. you investor conference does for Thank call.

now disconnect. may You