For the next four fiscal quarters, analysts are expecting McDonald’s (MCD) to post revenue of ~$21.2 billion, which would represent a fall of 12.8% from the ~$24.4 billion it has seen over the past four quarters.
Factors that could drive McDonald’s revenue
To optimize its operations, McDonald’s had planned to refranchise 4,000 restaurants by the end of 2018. The company has reported that the plan is on track, with 3,500 restaurants to be refranchised by the end of 2017 and 4,000 restaurants by the end of 2018. This refranchising is expected to lower McDonald’s revenue over the next four quarters.
However, some of these declines are expected to be offset by positive SSSG (same-store sales growth) and the addition of new franchised restaurants. Apart from menu innovations and its marketing and promotional initiatives, McDonald’s has been focusing on three aspects to drive its sales: digital, delivery, and its EOTF (Experience of the Future) initiative.
Mobile order and pay system
The company also plans to implement a mobile order and pay system in 20,000 restaurants across the globe by the end of 2017, with 14,000 restaurants participating in the US. The experiment of delivery services in Florida has already yielded positive results and appears to have compelled the company to expand the service to other US cities.
To enhance the customer experience, the company plans to have 2,500 EOTF in the US and convert all traditional restaurants to EOTF by 2020. All these initiatives are expected to drive McDonald’s SSSG over the next four quarters.