RISING COSTS, COVID-19 RESTRICTIONS TAKE A BITE OUT OF McDONALD’S PROFIT

McDonald’s Corp. missed fourth-quarter revenue and profit expectations as higher costs and tepid sales in its more than 4,500 restaurants in Australia and China, owing to pandemic-led curbs, ate into gains from growth in the United States.

Operating costs rose 14 per cent to US$3.61-billion as supplychain issues led the world’s largest burger chain to spend more for ingredients and packaging material. U.S. food and paper costs rose 4 per cent in 2021 – a level the company expects to roughly double in 2022, it said.

In the U.S., about 20 per cent of restaurants have shuttered seating areas because of staff shortages or local COVID-19 outbreaks, and about 1 per cent of U.S. stores are operating with reduced hours.

On a per-share basis, McDonald’s earned US$2.23, missing analysts’ average estimate of US$2.34. Sales in China contracted after some cities banned dining in restaurants to control fresh pandemic outbreaks ahead of the February Winter Olympics.

However, the Chicago-based chain’s U.S. same-store sales increased 7.5 per cent compared with analysts’ estimate of a 6.8-per-cent rise, thanks to the launch of special menu items such as McRib, celebrity promotions, loyalty program-driven growth in digital sales and menu price increases of about 6 per cent in 2021.

Sales growth in Italy, Germany, France and the U.K. also helped boost global revenue 13 per cent to US$6.01-billion in the three months ending Dec. 31.