Cannot Estimate Coronavirus Impact On Business, Says McDonald’s

The fast good global giant McDonald’s has said that it could make offer to some franchises to defer their rents because of the significant drop in footfall or because of closures because of the ongoing uncertainty that has been brought about to its business by the coronavirus pandemic, the company said on Tuesday.

Right now the company is not in a position to make any exact estimation of the “negative financial impact” to its results because of the impact of the coronavirus pandemic since it is not sure about how long its business will be disrupted or extent that disruption will happen, the global fast-food giant has also warned.

According to a regulatory filing by the company on Tuesday, McDonald’s is closely functioning with its franchisees all around the world so that it could work out some way to generate financial liquidity. About 90 per cent of McDonald’s restaurants globally are operated by franchisees.

The filing said that currently, “substantially all” of its stores are operating with only drive-thru, takeout or delivery options within the United States. Some locations may have limited hours.

Operations of the company’s stores have been limited in most of its international operated markets segment such as in France and Canada. All restaurants have been closed in some markets such as in Italy and Spain.

Government regulations determine how long its stores in the company’s international developmental licensed markets operate. The company has said that most of its restaurants in Japan were open and operating while about 95 per cent of the stores in China are also currently operational.

The long-term forecast for earnings per share growth as was announced by the company is in the high-single digits while it has forecast that its systemwide sales growth would be in a range of 3 per cent to 5 per cent. In 2020, McDonald’s planned to add about 1,000 net new restaurants globally, the company had said in late January and had added that it expected to incur global capital expenditures of about $2.4 billion.

All of its construction projects across the United States were being delayed by McDonald’s, claimed a report published on Monday by The Wall Street Journal. There were no comments on the issue available from the company.

McDonald’s shares were relatively flat in premarket trading. Since the beginning of the current year, there has been a fall of about 25 per cent in the share price of the company. Its market capitalization is nearly $115 billion.

(Adapted from CNBC.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s