Update on COVID-19 Impact to Our Business
Today, we provided an update on the COVID-19 impact to our operations and certain financial items. Following this release, our President and CEO, Chris Kempczinski shared a note with the McDonald’s system addressing our ongoing response to the coronavirus pandemic.
As you are all aware, one of our five principles in managing through the ongoing coronavirus situation is to be “transparent with all of our stakeholders.” In that spirit, today we publicly issued an update on our response to the coronavirus pandemic as well as how our business has performed since the beginning of the year.
We will still be reporting our performance for the first quarter on April 30 as planned, but given the recent disruption to our business, we felt it was important to provide an overview of its impact sooner than that.
While you are welcome to read the update in full here, I wanted you to hear from me directly with a few key points:
- The current situation has had a significant impact on our business. We entered 2020 in a strong position, but of course the world has since changed. While our January and February global comparable sales were strong, changes in consumer behavior and the various restrictions in place by governments around the world have led to a significant decline in sales.
- The decisions we make through this unprecedented crisis will define our system for years to come. We are taking a disciplined approach to all decision-making, including reviewing all investments and reducing our spending where possible. As a result, we are reducing the number of EOTF projects across the U.S. as well as the number of new restaurant openings around the world. We will continue to operate with a long-term mindset, even if that means making decisions that feel difficult in the here and now.
- Looking ahead, we will need to be responsive to the reality of a post COVID-19 world. The Velocity Growth plan has provided a strong foundation for the growth of the business. While we’re not sure what a post COVID-19 world looks like yet, one thing I do know for certain is that we will keep innovating to elevate the experience of our customers and our crew. And against that backdrop, our purpose remains unwavering: to feed and foster communities.
The myriad of ways in which you, the System, have stayed true to our purpose is truly inspiring, especially when operating with any sense of normalcy is so difficult.
We’ve already made the difficult but right decision to cancel our in-person Worldwide Convention in Orlando. Many of us were hopeful that we would host a digital Convention on the same timeline. Instead, we’ll look to have a digital event later this year, once we’ve emerged from the peaks of this crisis.
You’ll also remember that another one of our five guiding principles is to “lead by example,” and there are so many ways that you are all living that concept every day. I remain immensely proud of how all of you have rallied in spectacular fashion in support of our people, customers and communities, while also navigating the changes to our daily lives. In light of the significant impact that COVID-19 has had on the Company’s global operations, I have volunteered to reduce my salary by half at least through September 30. These are unprecedented times, and simply put, I felt this was the right thing to do. Ian Borden, Joe Erlinger, Jerry Krulewitch and Kevin Ozan have volunteered to reduce their salaries by one-quarter, also at least through September 30, as our Named Executive Officers. This follows discussions with the Board in recent weeks and they endorsed this decision.
The world is going through a historic event, with profound consequences for McDonald’s, for the restaurant industry and for humanity at large. We’re learning more about this situation by the day, and over the coming weeks and months, we’ll better understand the enduring consequences it presents. But I remain confident in our future because we have the right purpose, values, and most importantly, people, to help us emerge from this challenging time with strength.
Thank you for your commitment and hard work, and you’ll hear from me again soon.