McDonald’s sales are gradually improving as more of its restaurants reopen worldwide. The Chicago-based fast food giant said Tuesday that its global same-store sales — or sales at locations open at least a year — were down 21% in May from the same month last year. That was an improvement from a 39% decline in April.

Ninety percent of its restaurants worldwide were open at the end of May and 95% were open as of Monday, up from 75% at the end of April. Some markets, however, are reopening more quickly than others. The United Kingdom didn’t start reopening McDonald’s locations until this month, for example, and 30% remain closed. Thirty percent of locations in Russia also remain closed but are expected to reopen by the end of July.

Domestically, 1,000 restaurants have their dining rooms open. Executives said that restaurants get “an incremental bump” once they reopen their dining rooms. “There is an incentive and motivation to get dine-ins open when we can do so in a safe and prudent way,” CEO Chris Kempczinski said. “It’s going to be a slow staging on that one.” 

Much of the dining room reopening’s will depend on local regulations, as well as franchisees’ comfort with the steps needed to make sure that restaurants reopening are safe. There is at least some disincentive for franchisees to reopen their dining rooms even as governments give the go-ahead. Same-store sales have improved and operational efficiencies from just operating the drive-thru have made many fast-food restaurants more profitable than expected. Reopening dining rooms can also be complicated.

At McDonald’s, the company shrunk its menu, eliminating All-Day Breakfast, and cut drive-thru times this quarter by 25 seconds—a remarkable improvement, especially considering that drive-thrus have been busier over the past few weeks. 

“I was talking to a franchisee in Alabama, and he was telling me that one of the big revelations he and his team had is that they thought they were running pretty close to capacity at the drive-thru” before COVID, Kempczinski said. “But they have found another level of capacity, just by focusing on operational elements. It’s expanded our view of what’s possible through the drive-thru.” Some operators have been pushing to keep the smaller menu, arguing that the improvement in speed and efficiency is worth keeping.

Todd Horwitz Chief Strategist BubbaTrading.com
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