(Reuters) – McDonald’s Corp missed revenue expectations on Thursday, as dismal sales in its more than 4,500 restaurants in Australia and China due to pandemic-related curbs ate into gains from growth in the United States in the fourth quarter.
There was no growth in sales in Australia for the world’s largest burger chain compared to a year earlier and in China sales contracted as some cities banned dining in restaurants to control fresh outbreaks ahead of the Winter Olympics.
“COVID-19 continued to result in varying levels of government restrictions on restaurant operating hours, limited dine-in capacity and, in some cases, dining room closures,” McDonald’s said.
Sales rise in Italy, Germany, France the U.S. and the U.K. boosted total revenue by 13% to $6.01 billion in the three months ended Dec. 31, but still the company missed market expectation of $6.03 billion, according to Refinitiv data.
Meanwhile, expenses for the burger chain that has more than 40,000 restaurants in over 100 countries has been rising as supply chain bottlenecks drive up cost of ingredients such as chicken and beef, as well as packaging material.
While McDonald’s had raised prices in 2021, higher costs continue to weigh on its profit as the company has been forced to increase wages to retain workers in the United States, its largest market.
Its total operating cost rose 14% to $3.61 billion, its highest quarterly rise in at least five years. It had posted a similar jump in the second quarter too.
McDonald’s same-store sales in the United States increased 7.5% compared to analysts’ estimate of a 6.8% rise, thanks to the launch of special menu items such as McRib, loyalty program-driven growth in digital sales and higher prices.
Global same-store sales jumped 12.3%, compared with Wall Street estimates of a 10.73% rise. Net income rose 19% to $1.64 billion, while adjusted earnings per share stood at $2.23.
(Reporting by Hilary Russ in New York and Praveen Paramasivam in Bengaluru; Editing by Arun Koyyur)
