McDonald's (MCD) 29 Jul 242024 Q2 Earnings call transcript

Hello, and welcome to McDonald's Second Quarter 2024 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Mike Cieplak, Investor Relations Officer for McDonald's Corporation. Mr. begin. may you Cieplak,

President and call for Chief today Chief Borden, Chris everyone, Joe me Executive us. on Kempczinski; and Ian Officer, the are Financial McDonald's thank morning, USA, joining Erlinger. you With Officer, of Good Chairman and

reminder, of in our mentioned the as available our those filing documents and earnings the on are statements along our with measures. GAAP call any today's website, measures to are on apply comments forward-looking non-GAAP reconciliations call a release X-K corresponding As also today. financial of Both on their

Following questions. recorded website. prepared being for conference remarks webcast this Instructions] is our via morning, we will take call being replay [Operator your and also is Today's

over Chris. turn I'll it now And to

a as Thanks, lower-income Australia broadened. markets particularly slowed Mike, Germany. traffic the and year morning, this The Beginning U.S., meaningfully in good have and of like markets of discriminating majority households. QSR more among everyone. deepened And last the Canada those warned progressed, has major our pressures consumer, has declined and in industry sector we and year,

comparable the negatively with also we pressures underperformance, But factors weighed be Middle that to for notably continue control our to contributed East. the were globally sales certainly our each most by across of In several our value performance in markets, These war in also external declines and there impacted on the quarter, execution. segments. within our our

to This us to as our overnight, prevailing market levers in wherewithal won't afford to it needed. competitive perform The industry, and McDonald's of happen. in advantages in sustain to in major defined the to has will our For many the our of have are financial markets is regardless leadership. value McDonald's the are and we we and company all unique times its a actions hallmark The happen pull, XX world we resolved growth bad, taking years, and reignite assert of but good our great ability share meaningful conditions. across investments

relentless to One service customers experience area local who most creating teams excellence customer communities, times more in serve of our to that our execution visit our our improved execute with operational customer power increase and this our it's reasons markets. is give frequently. Leading of the customers on restaurants across will and kitchens. focus to satisfaction of improvements, better leads menu core And strength restaurant execution outstanding more major has into delivered continue also to a our

example is Best of great deployment Burger this. Our of a

and deliver expect we markets innovate all with on menu across will great burger product over year, Now last customer includes layered [indiscernible] ensures perfectly deployed driving have we late we X money. perceptions. address unmet XXXX. focus gold patties by and piloting elevated on And more end international year, the quality the continue we're basics track value toppings as and to needs to core We McDonald's across with in burger cheese, beef the our standard a a deployed This that provide our in burger, to melting this of which crispy announced remain new best markets X XX% training the of for satiating sauce. customers markets, which is taste nearly

of on It's more before and attest our Big flavors, learnings through gather scaling to year a burger a learn internationally. with McDonald's twist the Arch, the plan broadly quintessential end we iconic named to familiar the

and through favorites of our at our growth now Chicken plans globally is more chicken globe and in growth and sandwich Crispy with now continue size expand growing McSpicy, of to share. significant continue equity, than We a The for twice beloved to around chicken a By while opportunity a chicken featuring that's our McCrispy capture offered like McChicken, on rate. faster McNuggets driving in further beef category par market we emerging and icons our have the like to sales. our XX McCrisy are the sales will beef markets in

our our grow. build system-wide Loyalty across digital members pacing to towards users our billion continue continues $XX XXX of million now of to sales. menu, represent ahead expectations also core as on penetration brands membership XXX identified ambition reached now of our and we we XX% work As members, has million

We that market U.S., more often. to I execution. value competitors, said on recognize of a us an preference, opening, spend customer and opportunity and continuing key in more And leader as our engaged visit digital result, but versus we're loyalty build our leadership share But and it's large the to know in our markets, my that recently including value customers understanding Consumers still as recognize our that as gains personalization behaviors. have value clear has we shrunk. gap we several improve the driving

has We significant to XX% from on sustained with XX% are market. increases cost to working fix The years, the pace. inflationary system several last our ranging depending that

via As franchisees, these value we protect and long-running cost and consumers buying led programs ways in increases. partnership reconsider restaurant absorb to increases efforts selective our look their disrupted to productivity profitability for price habits. with increases we These price

In rethink programs consumers like program, like value U.S. Spain markets with allowed were that been share to and their adjustments have flexibility by drove quickly embraced markets gains. some has the comprehensive required. market like their $X and In other McSpart Poland, Germany, $X more a make of the them $X value

wrote do are share Joe President, just will on growing. necessary we this. make to competitive are strengths with playbook our Our working on minute. is, more and a our is the franchisees about We and how the The point McDonald's and in formidable plans we call the Erlinger, U.S. adjustments. value, know to

and is brand Our non-tech world's brand. #X ever. strong McDonald's most as fifth recognized Yet again, the Kantar the brand as most valuable as valuable

We're area of strength. operations an our excellence, and restaurant executing with are

and we openings loyalty however, value Where strategy, build consumer programs, the to and agile take have is cost drive our customers as every accelerate innovation. largest for will the our staying to I'm remains these and restaurant we Our delivering advantages our development we for we're them. within company world's of and to build digital for to customers muscle not footprint customers and and also and day. unmatched the will investment the we platforms granted, Accelerating one Listening confident Arches flexing led committed that opportunities, we We as our and tell restaurant do industry address accelerate new it technology efficiencies right growing playbook shareholders that us the business. our are of

to share standard pillars gold growth traffic and Continued the to and right restaurant growth. our return focus are actions on grow execution market

the it hand Joe. to more on U.S. segment, To now I'll share over

good to in Thanks, Chris, bit years morning. by call. and earnings XXXX. I progress few back want since It's the about in I've McDonald's McDonald's a call has reflecting And start USA achieved been that participated a since the

years, active Over which McCrispy. XX the several improved and XX% moved needle the We've users. U.S. our like the in system-wide grown we've X chicken has million sales over to past of areas, launch significantly market with over also XX-day loyalty, of our share

future continues experience, our an grounded to and raising satisfaction accumulation again focused and the touched C&V, our success exceptional our we beginning, deliver That changing customer considering keep we've for match over As customer the highest-ever that customers, I meaningful relevant time very the cleanliness evolved this bar earlier, years for customer people, to Chris of on was our QS Since for a our current today. through providing McDonald's And continue customers' the to as the quality, foundation in our earned values quarter, and on we've as our this approach be excellent reality. growth. experience of McDonald's score. our strong service, on its then, brand customers, . In USA said we're to and decisions approach year-to-date delivered last expectations our value. it our the continue now

are choices deal they value While And relevance. experience both see we providing on thoughtful eat. provide work to reflects customers, hard us more fans a moment, McDonald's. they're $X to said, customers where McCrispy we making value and telling when business sales, always All current we're our where more I'll context, laser-focused listening and drove about share and along meal buzz as cultural Cagan Ranch and one and brand about industry-wide great to that the this beyond. summer our [indiscernible] to Bacon with promotions our performance the challenges want remain And even from while value they in and

our So we that tapped already exist into ideas within system.

across meal overall system, incremental life successful, $X in we New for sales. customers and our York was highly with the within brought from lower driving By performing running have deal local leveraging customers been restaurants learnings that own to U.S. Our income a this Upstate well

and To sold our at shift has deals deal of are can highest to of positively. McDonald's. expectations. lot sentiment brand are begun date, ways of committed and enthusiasm great summer. the lower-income U.S. are value customers extending a amongst around of seen number value offer experience towards And the Trial affordability further even to there the and meal $X into consumers the rates the above the have restaurants XX% other in We've

including every Friday you app. steady We Fry mobile medium Fridays, the can the nationwide fry continue of purchase a free offers with $X provide a to where app, on get stream free on any

the at of expect very the to for grounded with the the to as important at a the U.S. customers day, living insights pinch the work value center. future competitive At we the customer cost quarters we continue next end will the of least feel and details of in continue this will through the And of we higher landscape. decisions platform, economy several make in

So sustainable brand. growth to to we us share grow to guest believe these and it's in the market for critical count-led factors for order consider return

given to our this scale is succeed competitive in McDonald's positioned advantages. environment, and uniquely size,

estate. fully We a modernized restaurant have

the or We the product shying new a core simplified that times while menu bringing right our never on at innovations. favorites away right back focuses have fan from pursuing

customers to loyalty of We with decisions plotting lead and path that right the where are and continuing long-term the they have they need success. one sustained us making our programs industry, mindset, down, a for we're meet in largest a also where while built

And to it over now Ian. I'll turn

and morning, good everyone. Thanks, Joe,

of strategy As and brand, our inherent challenges we the them Chris with customers at despite and on built Chris that confident from top of so coupled be Joe, visit drivers on love the near-term growth McDonald's service brand emotional with we When deep and most insights is facing restaurant with mentioned customer heard our McDonald's, our our long-term we memories communities remain critical we the through and tap very the rituals value level and day. business. often. special. At our our for will power more most satisfaction, the every major our in serve each compelling to advantages the rooted real the higher that connecting are as to level reasons across competitive MCD make about sector, And our improve customers Strong customers call, times our of right the and heart giving against an we're brand local what delivering into insights our more celebrating combine of markets. you execution customer

Our and enjoyable create a the are continue of MC growth they Ds offering affordable and we and deeply while relationships to it's deepen consistent that love. and intersection experience at customers interconnected drivers restaurant our the and delicious food our with

in with our Chris holistic value a to have and we that front largest a our and offerings offering to discussion. each evaluating an urgency a to meets with center XXX-degree markets, agility Germany our winning This affordability customer and holistic value continued implement McSmart delivering example best-in-class met customer have recently a their As ensuring to acting are are approach them they satisfaction driving expectations. where still with and across with to at levels forensic market and and strategy, we has mentioned, solutions consistently strengthen a that of We're we're taking we customer, approach and customer markets, the of designing to awareness. every opportunity gains. against elevated listening the deliver share including of sales, center ultimately is value incremental program proposition

markets have early McSmart have system, adopted the platform, we and their France best own and scale As the across encouraging. version of Australia like practices been results

mix but come offered opportunity address And launched looking recently a at at an the love their offer has together value and market a fastest-growing just that beverage part to the more X-pound in our it's at share than always in resonated market, options with and for just an bundles price value customers May, destination day point customers breakfast, every and they Canadian affordable affordable coffee their $X. communities smaller, new the more starting long meal offering for the match affordable own day about McDonald's been more price. been for U.K. to more remains menu of to compelling which with the X

mobile This quarter, in-restaurant experiences, elevate McDonald's order decided and we customers their value, our food experience, combining to enjoy continued unique and delicious the delivering app with to favorites. however whenever ultimately and

and Germany daily a menu leaned a with discounts fry into which mobile local to app interactive in bundles. launched available nationwide the items the most seasonal app drove days, exciting significant the fries. summer growth deal like promotion the free the restaurants meal calendar campaign exclusively to of for iconic unique then promotion fun gamification, traffic engagement customers to drove loyalty Italy Easter a deals the could fryer market enjoyed To scavenger Big holiday loyalty Mac points our calendar mobile where for on quarter. our and sales. icons, members McNuggets or the in remarkable with on hunt loyalty And And the to from approach meal new a Canadian or featuring this a similar market variety free with returned entered program a be favorite, frequent engage Chicken a

performance promotion, throughout well in to our codes entered the landscape execution drivers, strong across category. lifts the Accelerating pressured million a industry this fry Nearly the Arches the against our driving with of as markets. Even reflects as U.S. were quarter many largest international X.X meaningful growth

IDL comps dollars war comp And consumer in broad-based by confident customers decrease we've nonoperating segment, the constant per was Japan the line China. were and tax quarter, to interest and of income year market our impact sales in adjusted drove effective where America for income. pressure other offset for in be lower top operated prior the spend positive of Despite rate growth to reflective the and nearly interest of ongoing partially X% compared share this international currencies. elevated Our in and France. expected negative, of intentional Middle pressured this with East from a in the quarter, to discussed morning, $X.XX performance Latin the higher more the due were primarily they earnings due continue a less as about to the XX% a This expense less in we

durability of our Top offset quarter with billion continued results to by digital operating and of restaurant investments our highlighting XX%, technology as line a enterprise convention. and margins due model. G&A over the business adjusted over generated as for margin was biennial well and the in transformation $X.X year-to-date of efforts worldwide This associated higher costs

about talked business prioritizing right to making As spend. we've we driving continuing the long-term forward-looking and our growth requires year growth invest while in committed current platforms are run to and the relentlessly drivers, strategic before, and investments,

at delicious in While value that size unparalleled will count positioned future our can that and we control, we expect drive significant believe challenges well only McDonald's industry we unique gains share system convenience There food power guest offering to remains are customers our the the growth. and what's with market focusing within persist, scale on provide. and

our to as North and we're deliver Star, growth this for system our believe shareholders. our poised With long-term we

earnings know, Now Mike's is as most you call with of this McDonald's. last

developing before I'd and to leadership So personally brand. key as have relationships our contributions a and playing role a been our take served a especially Mike on stakeholders and at team as I communicating almost to been as to as trusted his taken to role strategy. has moment in of invaluable ability CFO. as McDonald's his for business senior thank long the adviser I've Mike has to with knowledge like I close, by deep our to our me, foster He significant

you. best with the Mike, you to thank for McDonald's, it We And I'll the future. wish at all everyone of that, back behalf over turn On Chris.

we Earlier brought Ian. together a our as Thanks, further leaders leading this goals discuss as consumer global establish month, to we brand. and McDonald's objectives

for chicken scale, leveraging in and team, and as to digital while lean we we a global to areas retention adoption As to and through D, all into platforms. M, growth cementing engine with acquisition, on transform like a our X technology urgency, growing committed and pillars, share leadership and blueprint value we are our bolstering customer continuing operate loyalty act our are C across how

that across offer customers and believe today ever than the hope McDonald's XX,XXX values-driven we going will restaurant continues around world, and towards know culture change, familiar the locations as led support and We the for presence of when execution, the teams digital ambition serve. tomorrow. the uphold by we we the prevail. position. communities restaurants we XXXX. Even world in of a We're where progress live, franchising in further a us of our and great they XX,XXX and where industry are reinvent to our making combine of power getting we our the the to we . We're continue best more leadership to value And end where our match. With meet will few they're And we high-level just we're forward, with beacon brand over strategy started. our are to will globe, opportunity ourselves XX,XXX could offering confident work and

communities. sincere franchisees, I to extend As you serving resilience to their commitment want customers continued our suppliers our and around close, and the a unwavering I for world to employees and thank local

with Q&A. we'll that, And begin

[Operator Instructions]

Our first is Ivankoe with from question John JPMorgan.

where environment value many more wide would grocery drawn savings in to Certainly, known. would necessary. their that it be COVID, ago, excess world X know data, versus and And would McDonald's consumer the quite well consumer gap fairly XX almost see consider industry was information has from months pricing have corporation an a down in months fairly would ago, does. restaurant be I consumers that access when we frankly, The

the if changed from as from changing to perspective significantly to kind needs of perspective before from really from being get months? happen to reactionary relative sense to to a And can, what opposed wanted pivots the anticipating of itself in I I more So how perspective, they last X McDonald's so your expectations consumer consumer's a trend after? XX value a just

John, thanks for the question.

may in few particularly major consumer was there in right happened about what has our intervening being that the You're And time consumer you is low-income of pressure that that and And were we a the markets. notable remember of that with we're period slowdown. low-income last have year, we're on the markets in this larger with it Europe impact seeing economize. looking an just also consumer, that certainly pronounced sort seeing particularly of more seen that families we've groups, same most are to but is as around people in talking

at X% also continued You're or and right two. about XXX we're food a gap gap between point a home home the away gap at The from basis right is looking between that inflation. food now

are you discretionary being as seeing So consumers treat much they restaurants. more

you're often, the eating that seeing units within the deal seeking you're within mix, more trade at You're I think, seeing, or us And just consumer consumer discriminating. more things from seeing transaction low. indicators these all either would is a consumer, I a being home even for our and per very of markets is major consumer the remains those markets of across are most sentiment in number that point out of down

customers going that around and we're make how what your do so And sure is point required. are where the value anticipating we these

seen doing we're with and for in a think talk And about I that markets or us number is are item [indiscernible] and place heard But of markets in we've the is, to U.S. what need McSmart, think to you've we're we've with put what fair of you done it's places, the context in us the have in. one a broader clear some things I with we're us just a in several also it's to what sufficient number that doing a in offerings items narrow that that not that the trying move few that consumer a platform value of question.

can offerings do world looking broaden places platform what could other further look that markets dial as going we And be at how is the also some the we on so what's perhaps down. we of in value for around

of and a And there's that immediately, to I happened know, levers. with franchisee We as say we've but be recognition something value. that not providing takes broader moment, you our to need it's our be other level across conversation, time, we providing that at the that's got of a value need good a same would franchisees, base lot

driving We've and menu can what a there. is we levers to a more great by there's from standpoint standpoint. need be We've marketing doing that got this up stepping So value. got do equities all need we about not some be around we marketing. And from to

facing got changes that also performing. anticipated than the at what working offering, know we're value. on the say that more we our environment where as It's to using a this back with and our last sure I'd yes, to difficult talking So should business certainly things markets, it's we're get making that we've year about other around we're that are we be that it disposal value but even

question with David is from Palmer next Evercore. Our

Thanks. Congratulations, through Mike. the your all Thank you help for years.

are of like to McDonald's sales value and you the the of in overseas? feels similar challenges and perhaps Where differ later. value might state Are as where right eating a question, searching I you terms do in satisfied key you guess you of how market trends? I'd far focus message? are terms still the the franchisees markets your stage about menu the versus from with is value of ahead in of at In the of it terms informal the message happen IOM are in to out like share U.S., negotiating U.S. the negotiating find perhaps news searching a countries. How on that As in

to add, need you But do David. I'll I'll anything if Ian and I'll Yes. start. start Ian, then there's Thanks, let have that. I

I on context, we've heard for is, our I I remarks, question. I'll our start, know Look, bit a are you industry about, Chris you to which Thanks strength will have as look that his across I markets, and of consumers the I the in a pressures with the And you had IOM just mean, talk a in the Sure. think think, system. I mean, real broad-based historically, nature. if opening seeing been think which think we're

external and think second those I quarter. I several in through significant certainly pressure gotten markets that think has more heightened of the

think the of I'll and affordability what value evolving couple And over a still an last so I it's quarters. We've about situation. call talked lot

know, we've highlighted you strongly kind the place performing As consistently that affordable of entry-level of of last is XXXX more our been Germany the which of McSmart, difficult in meal, Germany in a in most put much quarters over we at the has couple one beginning option an meal markets even in marketplace. in context

I of part what's So evolution happening what's the the with is it -- think the it's industry. with just of consumer, happening

with we think strong alignment markets. international our franchisees engagement I have our across

think and place programs constructively and from working in I standpoint. get right platforms value and very to collaboratively the a affordability we're

positioned the it's just to is delivering of think platforms be the be better context. and the sharpened part I in have and landscape think been to needed I consumer current in evolving those offers and

and speed And and And as talked so heard to kind with about I environment, opening us has ahead of has our I we're think you've but been we're that as about changing get we're just been the pace, before, think evolving. think, in I -- we've context trying of moving talk remarks.

U.K. good as news our just with Savers you've France McSmart, lose with Change menu, has IOM look would if you at McSmart markets, think McSpart. add with and about Australia got McPick, I What Germany the menu, the is got you've also you if is Canada

is those the in and reflect established the markets, awareness that right we that's and those have platform underneath today. price at items value sure work good those at this is underway the platforms. have to the platforms value making value the market to points We right where Ian alluded of there's consumer that

And they're so to where the U.K., France for menu example, as like well. there are the in markets making changes

adding X-year a meal. happy They're

more happening what established those make So platforms that are what feel I menus see like value we are to little we for those where a on menu like. in awareness the positive appropriately those have obviously that versus good the look the fact sure context. going underneath is that value as But is about now to long-term positioned do bit market they're that U.S., there's platform to a the we there's changes that starting work

with question next Stanley. from Brian Our is Morgan Harbour .

a it's question on obviously, continuing grow. I Because right? to Yes. had digital,

You've continued some really the right platform, that a to good you're but seeing really challenges hasn't of now. add lot that actually of sales value members there's it available on offset

So that, I that what Do you the think kind differently drive you place it's do guess there? of change? needs going be confidence value to that Or done And of a what forward? gives could to kind continue to is resonating? you think

question. to the it's We business, good about digital Yes, strong the a great feel digital really on our opening. as alluded performance we're seeing business, and I in

customers. now our I is digital right only XX% identified think the on about challenge basically on of of customers are digital terms in

we're the you we needed that's penetration some overall to and as have the think entire the is yet little just our everyday consumers, to offering digital you aren't we maybe happened available what over started to probably I you broad as with the so do versus has what that platform. of on who value all yet at drive things those rotated need digital to don't And on business, business. to about were And size move at look digital a think

So underway. work that's that's the

to going I going to as you particularly certainly, think of us. as we're on get to more to digital about a continue platform. and grow know, penetration more business value. to different don't have today, XXX the can that's conversation drive be how to of digital XX% not get that's the where just we But users, million it to digital. years' couple And our you think digital for on a in move in time, we customers time, I is need

that's just talking been have so we the that And value about. work

next David Tarantino question Our from Baird. with is

on U.S. couple initiatives. A questions of value the

whether the the you Chris, meal was hoping And and running in might elaborate of platform idea markets. of in supportive how that And necessary you wondering, it's then are broader and traffic franchisees inflection $X I you're more mentioned value could have just seeing the and deal platform from are I the U.S., sales or First, when a going that program. all to think, you franchisees with national effectiveness of secondly, key on anticipated your a those you're had conversations whether that I'm happen?

Thanks, what appreciate done do. it's deal, questions. and the it really wanted $X meal to David. we I to performed exactly the Relative

We to And . with affordability, change especially see consumer through and lower single it that and a improved we've that. make the that we consumer. user, base. by brand First, to that it's the seen value connected sure income and around perceptions rates wanted done increasing wanted trial

counts cohorts, in income the deal throughout obviously, participation $X around and the $XX,XXX And promotion, wanted saw health $XX,XXX encouraging. the in long-term short- then of a ultimately, meal the do in $XX,XXX under I both the yet translated to while was growth. which an the to of that, it to shift And the hasn't lastly, and incredibly business. life lowest to drive guest we X trial Our cohort believe, count-led increasing cohort, it's And see into sales. guest begun

though deal. $XX the The meal has average $X over been check for

platform franchisees. menu, X value investment over through we X, national for partnership about be about our to years the as and feel happening a very Menu happening in with X now platform, the when franchisees. be. our longer-term When work affordability add-on think obviously, and Dollar Relative and everyday is that considered that's good us part the to will and we you X, and dollar years, about do of place for which is think existed our we over So what need That that's just work XX thoughtful you big comfortable program. as been for this

the we'll platform. that the to And and that the value franchisees national impact comfortable no and There's of see everyday so the importance right answer. a question we're get affordability

continuing extend the that And great into XX% In and deal them. pace even working the meantime, $X we're in with restaurants at our through offer working value that so we're August, consumers to with franchisees longer. our obviously, we're extending with to of meal

which bit. value We app, Chris continue great just a the to offer via about talked

a to level. what We business unit also we our continue at have deals of local call lot

fall. to throughout So offer we'll consumers into squarely continue summer and our the the value

America. Senatore with from question of Sara next Our is Bank

of margin you'll IOM, what additional and seeing sort in in to very we seeing. I have the deflation or different been trimming implications. which about either franchisee from we Specifically, actually particular, know need some some cuts, support ask other talk And be for to wanted I maybe seem U.S. about is beef Great. whether

any to Is franchisee fund. you not a again burden. sure that either contemplation the that franchisee in given to IOM value guess, funded that Anything investing pressure? contributing franchisees. I lessen I of is you'll [indiscernible] offering there's is have now. I'm input Or know lower less corporate more margin stands So from But with markets, are perhaps behind had platform. support. marketing or permanent address to there the costs you'll you some where McDonald's help, value, extent something have maybe to that that of some by

performance obviously, has I'll I it's think the Sara, top said Joe maybe Ian. I you pressure line more a mean, I as standpoint, at and start in then Look, Chris been might mean, think the I jump or muted. end. margin from

areas food quarter well of inflation seeing levels through creates think of seen that you you they've level obviously we're a lower bit of that much because, But margins of the like pressure. single-digit up as a you would of if are proxy which pretty have down held [indiscernible] our a certainly kind low at the and as in kind use level. I paper, simply noted, So

in mean, in the inflation, is a I minimum labor like especially California. changes little the higher places obviously, still, particularly with wage some U.S., of

and answer of obviously trying I fundamental to your strategically always kind and And us kind we heard of of kind of broader as that place we have business that's model. have mean, that of I pricing. maybe that, is you would I a something talk just don't need to our value our understand your part subsidize in I understand think the in operators of part think affordability terms -- about, question, owner previously mean

affordability Joe business you growth, touch ultimately and the be cash strong profitable to sustainable in So and profit and for both get time, a our value drives And right and and the obviously, going volume-led we and for flow system. we volume, outcomes as what that for drives way for what know want to to on do that the McDonald's. that think over is sustainable is a I on way heard and it's operators

we and let may of just or sure making I this weigh to creative win against these in Chris ways, to think a system life Joe execute of I as of some in bring we in. that obviously, our we're position the to get put them all put ourselves in we of effective difficult kind ideas want But and place, resources going a environment. and in to

would strong I in a U.S. in our are just franchisees I add, position. financial Yes. very the mean,

terms And so investments flows cash equity both the have well can those they investments as firepower, they to across their make as P&L. make and in of financial

margin gross now look a years right at those years. versus pre-COVID, high If we're the you XX actually XX in actually at

So think ability at But ability are them our P&L now overall And or to they've working franchisees we we the through meal $X via with good the very invest. deal. about profitability right to look of of feel their the the we invest otherwise. got

position And in so the we're the U.S. comfortable with

is add word that underline which strategies interested that only use, things only can just in is My Yes. would We're are sustainable. I the sustainable continue. doing in we that

our And the there they a our going need think so implement be things. within to where strength guide is changes, us. for but think, as sustainable of, we these our to to financial go system I And on lot within have system, we strength to that's about be necessary

Geiger Dennis with is from UBS. question next Our

thanks, focus I and you, luck. all your deal. appreciate on Thank help, the all to for I the again there. meal insights of wanted best Mike,

for of it message meal Is up help kind Specifically, in as intensity could marketing thinking deal that and or U.S. the ramps the sort and it of us to relates marketing it where something now? right the us something is frame you that about the customer awareness a the think time a or historically to bigger time in about line how new about contribution. of thinking offer new count this just kind that related, market platform, of like -- guest to value a way line a Is from generally value environments there new looks.

Yes.

learning I voice our think power from of McDonald's. the this we're what national is

But upstate XXXX, obviously voice that work our As it was had looked comfortable we that us national what we that the we participation deal, some meal we felt what rates very New -- the we a about, happened with York. value took compelling. something And had voice, we in New has as last and already deal local and existed strong York, $X actually a Upstate upstate that when was achieve voice. doubled at that, you talked trial that look apply already time the is national and which franchisees exited York, in value to at New in to level at and when national

of actual of And the so the actually message, you also importance a being price pointed. the see message then power

in meal promotion you that we BOGO, run buy one participation than know, a we XX% January. that buy a we've in trial have one saw rates the January window. As one And greater get get one for $X

like $X is that marketing, $X dollar that the be national with when awareness $X brings. building I will awareness the a Everyday our national launch affordability the absolutely just awareness. Menu Value platform, But So get obviously, specific Dollar we've at of new in critical, menu. into that, that past around power won't and of platform certainly, done, we numbers

ultimately the drives add only is PACE PACE. on externally question nothing It's There's an thing. My that on us. is internal the that all

seen the in conversations we've changes. my the there's we've alignment, in it But breadth hope places, some to France, a end can other capacity because move like the markets like requires and example, day, at the of quickly market would more for shown where that U.S. so quickly in strong certainly move be of we the of And the very

are with the franchisees Joe of that talked the discussions team to having we've value platform think about I and importance great getting that about.

with Bernstein Our next Barclays. question is from Jeff

Great.

China. U.S. otherwise the And on it's just was seeing any view McDonald's touch what maybe and outside if then is a brand change issue, is and past looking perhaps, or hoping referred versus pause in you competition a consumer that wondering macro China, there. aggressive growth mentioned I think less to if strategy, think in which how lines France, I a I'm helpful. of an you're just to you France unit the you anything you're the you issue maybe I along to seeing U.S., anything more Just outlook specific be give wondering would or on those pushback know whether confident. you I'm in

we're for about pricing. seeing who's I've right us. competitor a of competitive the we're market fact sure improve is A things there me to But of what about a still pricing. Sure. performance. accurate competitive Thanks Jeff. is McSmart reflecting And there now. we've a being in to suggests One very that France, in I slowdown. our it element. past the Well, menu that is we're on with share that on question, some we've make France to the you're losing talked think seen And We're opportunity talked that's starting in the Certainly, been an has for enhance certainly, that couple us for aggressive things one in also doing been our has brands. that to

Second, over the that's where back us because X issue. they're happy EUR for key the families. meal, there. addressing France with has is such a family That's meaningful business so coming consumer with Families

sure we're can And what be are is customers then we engaging markets positioned. with brand Muslim our higher doing where also has to looking is we that of the that a X France at population. around make

And population. East, because so in has markets when in been that you of Middle impact the than seeing France that maybe we're think about the more other

the doing But has do fair So there's say to it's a sure I lot our think we're make that is marketing level. on the telling we looking from at is at we standpoint but team a how opportunity slowed to story very back local more want market an small share the growth, participate and growth The in modest, to have that. we down, in get France. still delivering to market that

a competitive other from across deal and China, China environment companies, Consumer broad very highly seeing consumer being of you've industry very, right it consumer in you're consumer the China And sentiment our as weak, seen the both quite case number industries, of range and a seeking. is in a promotional. is of very In much now. is

where That's best of end of deal. a seeing up consumers, we're behavior terms whatever just in the they fact, is In switching lot going.

environment, Positively one, we're share. in holding that

is in we our good So business returns that share. I second are thing And holding still that seeing on unit our openings. China the say new is would

an what is seeing acceptable would those new China. the But returns return growth from relook consider we in ever new runway -- around are lot our are If So what on And returns that to from there's the point, pace we units. new certainly on holding openings we're to below up. at on opening units. that be we a were now, We get our of right dip vantage threshold. would laser-focused

our from year working the still been in we've restaurants XXXX. that so per we're number And on, base that vantage toward X,XXX point,

-- broad-based on across to know about just I I what France, just I Chris the IOM. which of that is, the we earlier, I you kind reinforce think on important touched think, trends want to pressures external on consumer, we're to just hook mean, bit industry and of might on the are I I think asking because I seeing a Jeff, were it is but little

significant would for I next environment more quarters. the I in eat. think and that consumers we are when they don't And say about changes discerning being, few heard as where, expect say what earlier, you've us

key as we're affordability forensic kind you've laser-focused a of us of of each about, value our talk heard markets. this review lot obviously, positioning kind of on our So and in

how winning frankly, us segments. of We're think, negative position to sense going across think, to our that I right. just the and third to of quarter I X operating the seeing, I IOM you've and we're moving, system that talk urgency, in strength has a at And the and win, certainly would across started about, push second think we've similarly get ended, trends but and to heard as the with comp a we're to position. each ourselves say, lot pace got know-how I quarter obviously,

from is question KeyBanc. next Gonzalez Our Eric with

thought from an the down. trade sense defensive expensive a option as of ones I'm just or share In curious was past, coal about more economic downturn because categories.

be perception So you depended you be addressed I'm the past? of trade the that's curious you in think whether in not function a that that construct can value value the down getting just on or something why And might new

that are is Yes. Well, we're low-income we Eric. the but trade seeing greater is than loss down, I consumer benefit. think seeing the Thanks, the down what of trade

seeing finding at in economize and cutting low-income cases, ways down eating other you're dropping home the out to market, consumer, trips. so many on they're with that And of

low-income So we trade just not offset are but consumer. pressure the to it's seeing seeing on we're down, that the benefit of enough that

from Bank. Our Silberman next Deutsche question with is Lauren

I wanted the thinking of the to follow back up year. on half how you're comps about in

positive are commentary to you expecting there still quarter-to-date the right in the the that negative. Is So we base running I continue talk would fourth it can start quarter case comps we -- year? as back when about . Should of third to, guess, through quarter be now? Any half a helpful.

Lauren, it's Ian.

seeing the So industry I said, pressures pressures, I I across as owned think, the on and said, think just I large I don't markets I And of X on every We're I globally. are few as think, reiterate a the to we consumer mean, -- our maybe broad-based. see certainly on things. change ball don't don't just how next that's and almost don't mean, over we value quarters. but that to crystal profess to future the the laser on a will few we expect think, have going that affordability we're getting we're like, environment right. I -- in think why look a focused a I those I

think they consumers much eating most just moving low-income about frequently of And it's think about previously. base less not markets, been category. our obviously in I us others. As I from consumers X which our you heard Chris out say, families, are across have just of even that than It's big to consumer cohorts so

confident think when that if our we I them propositions, consumers in get right, if we get that can. back will into to each marketplace, winning that and we're value affordability come encourage position they

you June mix the a of if beginning take some that May, and run ran markets think be happy done, to like we best for that. we campaign done I we end the And back have XXp as also and a match are I'll an consumers our of example in use know to When draw in do a X-pound what know to U.K. They bit X of examples of campaign. offer app. we able that, the able positioned meal X-pound compelling we're options of affordable

So that's we're what certainly on. focused

turn As the can that environment think I certainly will will turn. when when or consumer don't I we predict, said, the claim

focused this environment that accelerate we each challenging look we're our what we're our winning momentum one making in And forward. of and positioned is think and each of our every in that as the begins markets sure I to in to turn we're on X current context as markets.

McDonald's Yes. this growth business. is The at thing essence, only is add a I'd its

we've sort do value business talked absolutely menu because way on that And negative to got to comps to getting can it committed platforms of last back digital we do more be foundation not of we but to We innovation. We've need accepting consumer is on of levers so the more just and marketing this about, of it our the a we're certainly that getting was as are year. as the that more is contributor headwinds. growth

business I back those of get need things place where it's to is. combination to we know the think to rifle all work in

from Brian Oppenheimer. question next Bittner Our is with

has more $X And when secondly, just what time this in value? seems can to just at that deal? reignite? that you else on getting has I'm you're curious confidence measuring remarks leadership what versus a gap feeling the everyone seeing reignite the it with much with confidence said can the it shrunk. success Or you value gap you is this aggressive your And be Is competition that gives your you what the are how gap you prepared this Chris, shrunk. the gap value informs

the Sure. Thanks for question.

So the impression, overall the value. get there's But surveys. brand we for is just X consumer-based both their to ways world brand They're serve we that we consumers around measure and one Affordability does different specific a broader price on how thing of being typically number value more affordability. to both a a value things. of being metric speaks that around impression and McDonald's points,

most little there's of gives bit I we part the it, experience, Like a current recent a and where survey consumer. also And brand survey-based. image. then a of more is seeing snapshot are that us of have said, all it's we So at that we second which do around looking

most the been we're particularly visit leadership on it's And our gap is recent seeing that shrinking.

Our of seeing the and in example. couple seeing that we the brand market, scores be are image those strong on more But still some shrinking affordability. for around very leading, a but visit value are gaps recent may a margin still there, we're of We of hold up. and pressure, decrease, some points the that

led continue on XX In terms ability about price to value, it years, our of value paper frankly, and brand we've what the value. And with lead food on the stands a And us can gives that to confidence better at starts anybody buy for XX than led because what we for. fact we've it's years, up for else.

anybody an in a competitive So underlying advantage industry. than lower buy can that have we else at price our we

define is are work But to that there that The how value we other consumers yes, thing around there's thing other point in all the our that consumer value, defines is the way of that a consumers' price value XX% the they are intangibles component think it. the see the example, example, value about good convenient Those XX% taste like, food. things restaurant of is maybe the typically use restaurant, for things how like to how representing or Things like, for clean how perceptions. is, not.

talk So about shape. heard just can estate the price past, low the restaurant in in overall experience And is also it's not our us It's about as deliver. you've you points. great hitting

are restaurants the scores running improving CSAT world. strong high. times are are Our execution, around service

lot standpoint So about we're value particularly talk our points intangibles this from sure consumer you've price us other in I to of that a that on favor. as where think from around make the that call, and be. there's things And got doing expects were the we've products platforms are value to and working and heard a us things

support to get as the bit that can for last right when our I us at we've scale experience. the get I point place consumers, might we mean the price unmatched. the get I in items system Chris And couple X we I of of just we little marketing level dollars unique priced on Chris' in double-click is have equity them platforms mean direct I'll current do just a Brian, and on just we that's on touched those we in these menu wouldn't that that items underestimate of power then the talked we hooks about I -- I as to that second on context have why we the quarters. win. just available one can of think the some

point fact put every Joe when that you experience. in at better think consistently in our for customer kind all would scores that seeing a all-time we're pretty I that right to we delivering we're together, And the and a relentless and the of market winning to of year. to that value kind this what world. talk going high that each an We're the are We're in in And U.S. satisfaction the certainly around position. getting that's for are consumer. the defines adamant be get faster,

Bartlett from question Jake next is Our Truist. with

make would, does $X like how you quarter U.S. the recent match? overall, seem I commentary true that really I below the improvement. but is I seems your that's you're with, U.S. was the and guess it I clarification that's sure And true, have My what the that, an hoped, true meal that's the $X want quarter driven as if a it you just that in to quarter. starting for that's implies on commentary It trends. third meal was the second ended think, about is really doesn't for the to said doing the second just reported And what think, that happy And If

the understand sure recent what's it. make there Just and driving to want on I commentary trends

Jake. That's right,

we up coming spend So have and that average we the experienced check here willing in seen in we we're obviously, And we so traffic usually in counts And promotions in before customer my the birthday $X The exciting XX more. than quarter at here negative the some we've obviously meal that we'll and the experience years shift little up for comes traffic comps Shake second guest to that just McDonald's, the of experiencing. because that think in got moving, obviously negative exited with over $XX. deal, and buying comps. the see is second get traffic half Remember if more Grimes And sales of that's $X a are success, can meal meal they year. lapped deal see coming around the the then we've we as the customers we the July.

strongly we meal marketplace and why $X that's that opportunity. the with which feel connecting deal So been how in about our specifically is has the in consumer,

for with time more have Tower . at We Citi. John one question

store line Great. but bit, got for I and is balance think off, to some thinking also the it now activity is Maybe margins year. of with of your be little inflation just a coming respect terms Obviously, expectations good similar to pricing seems you've rolling in like guys for the off going promotional of a ramping.

of early the the both and 'XX? in So how and margins should we for in segment 'XX the U.S. perhaps anticipate IOM the store the impact on balance business

John, it's Ian.

I more growth. get Obviously, and as Well, pretty try line half, noted, held would have top Let Restaurant margins seen up even through think the look, well. one. with me that have muted as you first the a through carryover managing pricing or pricing we from XXXX. to still we're current certainly year, just will expect you through We take obviously bit less take got of the context in. fair

paper inflation items certainly couple about from cost the wages I come helps of where little last bit. substantially it's certainly, on of earlier, over been and outside And a down as food has and talked that So years. other

about, I The talked particularly California. we've from helpful. wage got obviously, U.S., that's pressures, So as the

I expect, if we working overall, that use those year, think a in But little you think a the you working we're down ended overall So we terms be as of if think pretty proxy And for certainly of this I bit year. that's the about through where when we're to in good I from through. XXXX. margins consider a I company-operated certainly what think context headwind

everyone, great our for Ian. Thanks, you, concludes you, day. Thank Joe. you, That joining. Okay. . Chris. Thank call. Have a Thank

Corporation Call. Investor This concludes McDonald's

may a You now have and great day. disconnect,