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Digesting This Week’s Earnings from McDonald’s and Other Food Companies

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Digesting This Week’s Earnings from McDonald’s and Other Food Companies

With a slew of earnings being released over the past week, The Food Institute looked into which companies are thriving, as well as which companies are experiencing issues.

EARNINGS ‘WINNERS’

McDonalds (MCD)

  • Global comparable sales were up 40.5% in Q2 and increased 6.9% on a 2-year basis
  • Year-to-date systemwide sales from digital channels across top 6 markets were nearly $8 billion—a 70% increase versus the prior year

Notably, McDonald’s reported that its Crispy Chicken Sandwich and its “famous orders” promotion with K-pop group BTS helped U.S. same-store sales outpace 2019 levels by double digits, showing that chicken and celebrity-backed meals are still popular with consumers.

U.S. same-store sales climbed 25.9% in the quarter and 14.9% on a two-year basis, while net sales rose 57% to $5.89 billion, topping expectations of $5.6 billion.

During the earnings call, CEO Chris Kempczinski also noted the success of the company’s new loyalty program MyMcDonald’s Rewards, which already has over 12 million users.

Starbucks (SBUX)

  • Q3 consolidated net revenues up 78% to a record $7.5 billion
  • Q3 comparable store sales up 73% globally; U.S. up 83% with 10% two-year growth

As people went back out for coffee, two-year comparable store sales improved sequentially led by an overall performance in the U.S., as well as significant net new store growth in China. There was strong demand for drinks including Cold Brew, Nitro Cold Brew and Refresher beverages. Notably, dairy alternative offerings represent nearly 25% of milk-related beverage sales, up from the prior year.

“These innovative offerings in cold and alternative dairy are particularly attractive to millennial and Gen Z customers,” noted CEO Kevin Johnson during the earnings call.

Archer-Daniels-Midland Co. (ADM)

  • Q2 net earnings of $712 million; adjusted net earnings of $754 million
  • 27% year-over-year Q2 operating profit growth in nutrition

In ADM’s second quarter, Ag Services and Oilseeds delivered operating profits almost 40% higher than the previous year’s quarter, while carbohydrate solutions results were almost double those of the prior-year period. A key area of growth was nutrition, which delivered a record Q2, with 15% revenue growth and 27% higher year-over-year profits. In particular, the company saw stronger sales and margins in probiotics.

Additionally, specialty ingredients delivered strong sales growth in specialty proteins. The company will build on this success with the purchase Sojaprotein, Southern Europe’s largest producer of soy-based protein products.

EARNINGS ‘LOSERS’

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Wingstop (WING)

  • System-wide sales increased 15.8% to $589.7 million
  • Domestic same-store sales increased 2.1%

Wingstop shares sank 7% in premarket trading after the chicken chain reported a year-over-year second-quarter income decline. Net income totaled $11.3 million, or 38 cents per share.  Given the challenges all poultry producers continue to face with staffing, CEO Charles R. Morrison noted the company expects wing prices to remain elevated for the balance of the year.

“Our expectation is that cost of goods will operate at approximately 45% in the second half of the year,” he said on the call. “We anticipate restaurant margins of approximately 20% for the second half.”

Albertsons (ACI)

  • Identical sales decreased 10%
  • Net income of $445 million; adjusted net income of $518 million

In its first fiscal quarter of 2021, Albertsons sales and other revenue was $21.3 billion during the 16 weeks ended June 19, 2021, compared to $22.8 billion during the 16 weeks ended June 20, 2020. However, the company is still seeing sales growth compared to pre-pandemic 2019.

The retailer revised its outlook for the rest of FY 2021, guiding for a sales decline in the range of 5% to 6%, up from the previous guidance for a decline of 6% to 7.5% and adjusted EPS of $2.20 to $2.30, up from previous guidance for $1.95 to $2.05.

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