Mcdonald's Corporation · NYSE:MCD
Mcdonald's — Investor Presentation (2024)
39 slides from Mcdonald's's investor presentation, 2024
Slide 1: McDonald's Corporation Investor Overview
McDonald’s Corporation Investor Overview
Slide 2: Important Disclaimers
Important Disclaimers This presentation contains financial measures that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), including Systemwide sales, free cash flow conversion and adjusted operating margin. Systemwide sales include sales a
Slide 3: McDonald's strategic evolution…
McDonald’s strategic evolution… 1950s 1960s, 1970s & 1980s Kroc meets brothers Dick and Mac McDonald at McDonald’s Corporation buys the exclusive rights their restaurant in San Bernardino to the McDonald’s name and operating system from Kroc becomes the national franchising agent for the McDonald br
Slide 4: …continues to meet customer needs over time
…continues to meet customer needs over time 1990s & 2000s 2010s & 2020+ The McFlurry is invented and launched in Canada Turnaround plan announcement (re-franchising, Accelerated unit growth with continued cost savings) international expansion Velocity Growth Plan corporate strategy to focus on Plan
Slide 5: McDonald's Senior Leadership Team
McDonald’s Senior Leadership Team Chris Kempczinski Chairman and Chief Executive Officer 8 Years at McDonald’s Skye Anderson Jon Banner Ian Borden Tiffanie Boyd Joe Erlinger Morgan Flatley Marion Gross President, Executive Vice President, Executive Vice President, Executive Vice President, President
Slide 6: McDonald's Board of Directors Roster and Committees
McDonald’s Board of Directors Roster and Committees Chris Kempczinski Anthony Capuano Kareem Daniel Lloyd Dean Chairman of the Board President and CEO, Former Chairman, Chief Executive Emeritus and Founding Executive, Chairman and CEO, Marriott International, Inc. Disney Media and Entertainment Dist
Slide 7: The World's Largest Restaurant Company
McDonald’s The World’s Largest Restaurant Company 41K+ 2.2M 100+ 65M+ Restaurants People Countries Customers Working for McDonald’s Served every day or Franchisees 7
Slide 8: The McDonald's System
The McDonald’s System The three-legged stool of McDonald’s franchisees, suppliers, and employees Franchisees Suppliers Employees 95% of McDonald’s restaurants Many recognize McDonald’s as 1 in 8 Americans have worked at are locally owned and operated, having the most integrated, a McDonald's restaur
Slide 9: McDonald's Business Model
McDonald’s Business Model Revenues from rent, royalties and initial fees and profits from directly operating restaurants Conventional License Developmental License Foreign-Affiliated McOpCo ~55% of Restaurants ~20% of Restaurants ~20% of Restaurants ~5% of Restaurants Investment $ Profits Investment
Slide 10: McDonald's Global Business Operates Under 3 Segments
McDonald’s Global Business Operates Under 3 Segments U.S., Intl Operated Markets, and Intl Developmental Licensed Markets & Corporate International International U.S. Market Operated Markets (IOM) Developmental Licensees & Corporate (IDL) McDonald’s largest market in 19+ markets or countries 75+ mar
Slide 11: McDonald's Segment Breakdown
McDonald’s Segment Breakdown U.S. and IOM segments are ~90% of FY’23 revenue and adj. operating income*** 10% 13% 25% 32% 43% 41% 41% 43% 49% 44% 25% 34% Restaurants* FY’23 Systemwide Sales** FY’23 Revenues FY’23 Adj. Operating Income*** U.S. IOM IDL * As of 12/31/2023 ** Systemwide sales is a non-G
Slide 12: U.S. Segment
U.S. Segment Unrivaled drive-thru presence and strong unit economics with a 95% franchised ownership mix* Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants (In millions U.S. $) $5.5M 100% 95.2% 95.1% 94.9% 95.2% 94.8% 90% 95% of Restaurants $0M have a Drive Thru 80% 2019 2020
Slide 13: IOM Segment
IOM Segment Powerful brand presence and largely reimaged asset base with an 89% franchised ownership mix* 10% 12% 12% 31% 29% 33% 14% 10% 11% 15% 17% 19% 14% 18% 20% 14% 10% 11% Restaurants* FY’23 Revenues FY’23 Adj. Operating Income** Australia Canada France Germany U.K. Other * As of 12/31/2023 **
Slide 14: IOM Segment
IOM Segment High average unit volumes across markets Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants** (In millions US $) $6.5M 100% Australia 85% Canada 80% France 80% 90% 89.1% Germany 75% 89.0% 83.7% U.K. 70% 84.0% 83.6% 80% $0M 2019 2020 2021 2022 2023 * As of 12/31/2023
Slide 15: IDL Segment
IDL Segment Geographically diverse segment comprised primarily of developmental licensees with a 98% franchised ownership mix* 17% 14% 29% 14% 21% 51% 69% 65% 20% Restaurants* FY’23 Revenues FY’23 Adj. Operating Income** Asia Latin America EMEA (Europe + Middle East) * As of 12/31/2023 ** Excludes C
Slide 16: IDL Segment
IDL Segment Highly franchised segment Average Unit Volumes* % Drive Thru Restaurants* % Franchised Restaurants (In millions US $) $5.5M 100% 97.9% 98.1% 98.2% 98.1% 98.0% Brazil 40% China 10% 90% Japan 50% 80% $0M 2019 2020 2021 2022 2023 * As of 12/31/2023 16
Slide 17: Evolution of Accelerating the Arches Strategic Plan
Evolution of Accelerating the Arches Strategic Plan Additions of Restaurant Development and Our Platforms 17 For more information on McDonald’s strategy, see the Accelerating the Arches page of the McDonald’s website
Slide 18: McDonald's Purpose
McDonald’s Purpose To feed and foster communities Serving & Sourcing Supporting Empowering Protecting Our Quality, Safe Food Communities People Planet Working toward Helping feed and support Serving up bright futures Helping to drive climate responsibly sourcing people when and where in our communit
Slide 19: McDonald's Impact and Progress
McDonald’s Impact and Progress McDonald’s continued to have a positive impact on people and the planet Serving & Sourcing Supporting Empowering Protecting Our Quality, Safe Food Communities People Planet As of the end of 2023, McDonald's $20 million donated to RMHC in Our 2023 pay gap analysis shows
Slide 20: McDonald's Values
McDonald’s Values The backbone of our Brand is a commitment to a set of core values that define who we are and how we run our business and restaurants Serve Inclusion Integrity Community Family We put our customers We open our doors We do the right We are good We get better and people first to every
Slide 21: Maximize Our Marketing Growth Pillar
Maximize Our Marketing Growth Pillar Tapping into the rituals and memories that are already special to McDonald’s fans Value Proposition Brand at the Center World Class Creative Meet customer needs in Fan Truths that build on Building brand equity by challenging times customer affinity through embra
Slide 22: Commit to the Core Growth Pillar
Commit to the Core Growth Pillar Global core menu items represent nearly 65% of total sales* Cultural Relevance Global Core Menu Menu Innovation Tap into customer demand for 17 unique brand equities with Focused on gaining share in familiar favorites, serving our >$1B in sales including the Big Chic
Slide 23: Double Down on the 4Ds Growth Pillar
Double Down on the 4Ds Growth Pillar Unlocking growth by delivering a personalized and convenient customer experience Digital Delivery Drive Thru Development Loyalty users are highly Delivery is in ~100 +27K drive thru locations Accelerating our pace of engaged, with over 150M markets, representing
Slide 24: Foundation
Foundation Speed, accuracy, friendliness, and quality are correlated with business performance PACE Customer Satisfaction Speed of Service Grading and consulting program Customer satisfaction improving Increasingly faster despite a more active in nearly all major markets across almost all markets ch
Slide 25: Platforms
Platforms Build on our competitive advantages and unlock new growth opportunities Consumer Restaurant Company Creating one of the world’s Building the easiest and most Building a modern operating largest consumer platforms, efficient restaurant operating platform that will unlock speed which will br
Slide 26: 2023 Global and Segment Comp Sales
2023 Global and Segment Comp Sales* Driven by continued execution of the Accelerating the Arches strategy 9.4% 9.0% 9.2% 8.7% Global U.S. IOM IDL * Reflects growth over the prior year 26
Slide 27: 2023 Global Financial Overview
2023 Global Financial Overview Strong growth over the last 5 years is a testament to the resilience of the Business Total Revenue Systemwide Sales* Free Cash Flow Conversion* +$4.1B +$29.3B $25.5B $129.5B 86% $21.4B $100.2B 2019 2023 2019 2023 2023 * Systemwide sales and free cash flow conversion ar
Slide 28: Adjusted Operating Margin
Adjusted Operating Margin* Franchise margin represented ~90% of margin dollars in 2023, leading to operating margin leverage and continued business model stability Total Restaurant Margin $s Adjusted Operating Margin %* $15B $14.5B 50% 10% 47.1% $11.1B 15% 42.8% $10B 40% 90% $5B 85% $0B 30% 2019 202
Slide 29: Capital Allocation Philosophy
Capital Allocation Philosophy Optimize and prioritize returning free cash flow to shareholders Invest in the Business Payout Dividends Repurchase Shares Invest in opportunities to grow 47 consecutive years of Maintain a strong balance sheet the business and drive strong dividend increases while repu
Slide 30: Capital Expenditures
Capital Expenditures Shift in capital expenditures from reinvestment to new units % Other 4% 3% 2% 2% 4% % New 25% 33% 41% 45% 52% % Reinvestment 71% 65% 57% 53% 44% 2019 2020 2021 2022 2023 Total Capital $2.4B $1.6B $2.0B $1.9B $2.4B Expenditures 30
Slide 31: Restaurant Openings
Restaurant Openings The pace of restaurant openings has increased 2,067 112 308 1,576 1,494 69 69 1,231 266 U.S. 326 40 New Units IOM 292 977 24 (Gross) 234 1,647 1,241 1,099 IDL 899 719 2019 2020 2021 2022* 2023 Net Openings 840 503 838 1,092 1,547 Net Unit Growth 2.2% 1.3% 2.1% 2.7% 3.8% * Exclude
Slide 32: Cash Returned to Shareholders
Cash Returned to Shareholders McDonald’s has consistently returned cash to shareholders via dividends and share repurchases over time $8.6B $8.1B 7.6B Dividends $3.6B $4.2B $4.8B 4.5B $4.7B $3.8B $3.9B Share Repurchases $5.0B $3.9B 3.1B $0.9B $0.9B 2019 2020 2021* 2022* 2023 Free Cash Flow 95% 98% 9
Slide 33: Capital Structure
Capital Structure McDonald’s maintains a strong investment grade credit rating $39.3B $37.4B $35.6B $35.9B $34.3B Total Debt $ 2019 2020 2021 2022 2023 Debt/EBITDA 3.3x 4.2x 3.0x 2.9x 2.8x Moody’s Rating Baa1 Baa1 Baa1 Baa1 Baa1 Stable Outlook S&P Rating BBB+ BBB+ BBB+ BBB+ BBB+ Stable Outlook 33
Slide 34: Total Shareholder Return Performance History
Total Shareholder Return Performance History 1-Year 3-Year CAGR 5-Year CAGR Jan’23 – Dec’23 Jan’21 – Dec’23 Jan’19 – Dec’23 McDonald’s 15.1% 14.8% 11.5% DJIA 16.2% 9.9% 8.4% S&P 500 26.3% 10.6% 9.1% As of 12/31/2023 34
Slide 35: 2024 Outlook
2024 Outlook* Based on current conditions, the following is provided to assist in forecasting the Company's future results for 2024 • The Company expects net restaurant unit expansion will contribute nearly 2% to 2024 Systemwide sales** growth, in constant currencies • The Company expects full year
Slide 36: Long-Term Outlook
Long-Term Outlook* Over the long-term, the Company expects to achieve the following average annual financial targets: • Net restaurant unit expansion of about 2.5% of Systemwide sales** growth, in constant currencies • Continued operating margin expansion • From the 2024 Outlook capital expenditures
Slide 37: Our Growth Pillars
Our Strategic Plan is Guiding Our Ambition Maximize Commit to Double Down our Marketing the Core on the 4Ds • Driving scale • Piloting a new large burger • Deploying Ready on Arrival technology Our Growth Pillars through marketing equity across the top 6 markets by the end of • Scaling McCrispy to n
Slide 38: Appendix: GAAP Reconciliations
Appendix: GAAP Reconciliations Adjusted Operating Income & Adjusted Operating Margin (dollars in millions) 2023 2019 Operating income $11,647 $9,070 Strategic restructuring 290 74 charges Impairment charges 72 - Adjusted operating income $12,009 $9,144 Total revenues $25,494 $21,365 Adjusted operati
Slide 39: Appendix: GAAP Reconciliations
Appendix: GAAP Reconciliations Free Cash Flow & Free Cash Flow Conversion (dollars in millions) 2023 2022 2021 2020 2019 Cash provided by operations $9,612 $7,387 $9,142 $6,265 $8,122 Less: Capital expenditures $2,357 1,899 2,040 1,641 2,394 Free cash flow $7,255 $5,488 $7,102 $4,624 $5,728 Net inco