McDonald's Corporation

Hello and welcome to McDonald's Third Quarter 2019 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. Following today's presentation, there will be a question and answer session for investors. At that time, investors only may ask a question by pressing star 1 on their touchtone phone. I would now like to turn the conference over to Mr. Mike Seplak, Investor Relations Officer for McDonald Corporation. Mr. Seplak, you may begin.

Good morning, everyone, and thank you for joining us. With me on the call this morning are President and Chief Executive Officer Steve Easterbrook and Chief Financial Officer Kevin Ozan. I want to remind everyone that the forward-looking statements in our earnings release and 8K filing also apply to our comments on the call today. Both of those documents are available on our website as are reconciliations of any non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures. Following prepared remarks this morning, we will turn the call over for your questions. I ask that you please limit yourself to one question, and if you have more than one, please ask your most pressing first and then reenter the queue. Today's conference call is being webcast and is also being recorded for replay via our website. And now I'll turn it over to Steve.

Good morning and thank you for joining us. Broad-based momentum across our markets resulted in a 5.9% increase in global comparable sales for the quarter and our 17th consecutive quarter global comp sales growth. This was complemented by gains in global guest counts. Across every country, function and level in our system, we're seeing improving discipline and robust levels of execution that are guided by our Velocity Growth Plan. Performance that is punctuated by culture that is embracing and leveraging innovation across every facet of our business. Every quarter, I spend several weeks visiting restaurants and speaking with franchisees and market leaders around the world. I come away from these visits inspired by how our actions resonate with customers. Never more so than today when our global economy presents many economic, social and political challenges and uncertainties. Across markets, our success follows a consistent formula. Put the customer first, strive to understand their needs and desires and constantly find ways to improve their experience. Then empower our people to pull the levers that create delicious, feel-good moments for customers every visit, every day. And that is, start with strong corporate leadership and system alignment around the vision. Engage local franchisees who bring an entrepreneurial mindset, a unique understanding of how to drive growth in their markets, and skill at developing innovations that improve efficiency and the customer experience. Leverage the delicious food that's at the core of our menu. Run effective value strategies rooted in deep customer insights. and provide outstanding customer experience by running great restaurants. And finally, layer in initiatives to accelerate and sustain growth. Visiting markets this quarter, in St. Petersburg I saw examples of how the team is pulling Velocity Growth Plan levers across Russia. In a tough economic environment, we are meeting customers' needs for taste, quality and value. At the same time, we're empowering our crew to complement McDonald's delicious food with hospitality and convenience for our guests. Our Russian customers have taken notice. We're serving more guests and delivering a better experience in our restaurants. In Portugal, we're seeing balanced growth across all day parts and all menu platforms. Year-to-date, our core products are driving roughly half of comp sales growth. and MOOC delivery is providing a meaningful comp sales lift. In Taiwan, which recently celebrated its second anniversary as a developmental license or DL-led market, the results are showing the benefit of the DL model. Our partner brings strong local leadership, a passion for our brand, greater insight at a local level, and financial strength to invest in a purposeful roadmap for growth. Finally, In Japan, where an aging population, declining labor force, and softening consumer confidence are combining to create unique market pressures, our team has made strong gains. By offering menu items that tap into local tastes, table service that resonates with guests, and continued promotion of our digital capabilities, we've grown CompCells in Japan for the last four years. Across global markets, we're serving up a proven formula that signals to our customers we care about them. In my visits with franchisees across the US, it's clear to me that excitement is returning to the system with execution of Bigger Bolder Vision 2020, the ambitious plan we built with our franchisees. Average franchisee restaurant cash flow is moving in the right direction with 11 consecutive months of cash flow growth through September. We expect this trend to continue through the rest of 2019. During the quarter I spent time with next-generation franchisees. These are children or grandchildren of franchisees who grew up in the McDonald's system and as adults share a long-term perspective on McDonald's proud heritage. In Minneapolis and Louisville, as in global markets, they are executing the Velocity Growth Plan formula successfully. They're running great restaurants, capturing the benefit from growth initiatives, and anticipating new ways to best serve our customers and crew in the future. Across the US, we're getting back to basics with the goal of running fast and friendly drive-thrus. We're providing tools in the kitchen to help prepare our food fast and with the highest quality standards, running national drive-thru challenges, which have resulted in improving speed of service, deploying new technology like drive-thru timers, which are now installed in 60% of the US system, to ignite cruise competitive spirits, and making bold decisions to reduce the complexity of our menu. And it's working. Thanks to these and other efforts, we're seeing continued operational improvements. Customer satisfaction scores reach an all-time high in quarter three, and seconds at the drive-through have dropped by double digits year over year. Now let me turn it over to Kevin for a deeper dive into our performance around the world.