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McDonald’s incoming U.S. President Chris Kempczinski speaks during a press conference in New York November 17, 2016.
Shannon Stapleton | Reuters
McDonald’s said Monday it’s expecting mid-single digit sales growth in 2021 and 2022 as the fast-food giant plots its recovery from the coronavirus pandemic.
Its strategy to drive sales growth includes more collaborations with celebrities, adding more chicken to its menu and piloting a loyalty program in the U.S.
The company told investors that it’s expecting annual capital expenditures of $2.3 billion, about half of which will be spent building new restaurants. New locations will contribute about 1.5% to 2% to McDonald’s systemwide sales growth in 2022.
Still, the company reminded investors of the ongoing uncertainty as a result of the coronavirus crisis. It said it would continue to evaluate its financial expectations and will provide updates if warranted.
Earlier on Monday, the company reported its third-quarter results, topping analysts’ estimates for both its earnings and revenue. McDonald’s U.S. business saw same-store sales return to growth in the quarter, boosted by popular promotions, like its deal on rapper Travis Scott’s favorite order and the limited-time spicy McNuggets.
McDonald’s shares were recently up nearly 4% in premarket trading. The stock, which has a market cap of nearly $167 billion, has risen nearly 10% since the start of the year.
As the coronavirus pandemic has upended both McDonald’s business and the broader restaurant industry, the company is taking note of how consumer behavior has changed. Its new strategy unveiled to investors on Monday doubles down on such trends, like customers’ preference for core menu items and the surge in drive-thru orders.
With its digital sales expected to exceed $10 billion this year, the company is planning to launch “MyMcDonald’s” across its six top markets by the end of next year. The new platform will tie together McDonald’s various tech investments, like its app and digital menu boards, and make it easier for customers to order and pay for their food. McDonald’s will test a loyalty program in the Phoenix area as part of the plan.
The company said it plans to take advantage of the strength of its drive-thru lanes by testing automated order taking, drive-thru lanes only for digital orders and a restaurant design without any indoor dining. McDonald’s also said that the “vast majority” of new restaurants in the United States and its International Operated Markets segment, which includs France and the United Kingdowm, will have drive-thru lanes.
The pandemic has also pushed McDonald’s customers to return to their classic menu items, like the Big Mac or McNuggets. The company said that its core menu items account for about 70% of its sales. It’s planning on tweaks to improve the taste of its burgers, like toasting the buns golden brown and changing how they’re grilled.
But chicken is growing faster than beef. In response, McDonald’s is planning to expand its line of chicken offerings, including the long-awaited launch of its Crispy Chicken Sandwich in the U.S. early next year. The sandwich is meant to rival those of Chick-fil-A and Popeyes.
McDonald’s strategy also includes staying relevant for its consumers. Its famous orders promotions, like those with Scott and reggaeton singer J. Balvin, are “just the beginning.”
The chain plans to roll out new packaging worldwide and an advertising campaign focused on its values and commitments to workers, suppliers and franchisees.
This is breaking news. Please check back for updates.
Programming Note: For more on McDonald’s, watch CEO Chris Kempczinski on “Squawk on the Street” at 10 a.m. ET Tuesday.
