McDonald's Corporation

Good morning, everyone, and thank you for joining us. With me on the call today are President and Chief Executive Officer Chris Kempczynski and Chief Financial Officer Kevin Ozan. As a reminder, the forward-looking statements in our earnings release and 8 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, along with their corresponding GAAP measures. Following prepared remarks this morning, we will take your questions. Please limit yourself to one question and reenter the queue for any additional questions. Today's call is being webcast and is also being recorded for replay via our website. And now, I'll turn it over to Chris.

Thanks, Mike, and good morning, everyone. A few weeks ago, I had the privilege of welcoming more than 13,000 members of our global McDonald's family, franchisees, restaurant teams, suppliers, and company employees, to our first in-person worldwide convention in four years. The sense of optimism and pride in our brand, coupled with excitement for our future, was overwhelming. We celebrated how far we've come together and united around how much further we can go together in the years ahead. Through it all, the message has been singular and clear. There has never been a better time to be part of Brand McDonald's. This was reaffirmed on our road to convention as our senior leadership team participated in a series of market visits to meet with and hear from restaurant teams in person. I look forward to continuing to visit more teams around the world in the coming months to see how they are bringing our strategy to life in our restaurants. McDonald's entered 2022 from a position of strength, and I'm proud to share that we built on that momentum in Q1. Though we continue to monitor the latest developments in the pandemic, we've been pleased to see strong recovery in international markets in the first quarter. In fact, in an increasingly complex and unpredictable external environment, the past few years have demonstrated the resiliency of the McDonald's brand and our ability to drive historic growth. We believe we're well positioned to weather unprecedented macro pressures like inflation, supply chain issues, labor availability, and COVID resurgences. There's power in dialing up our execution and focusing on what's within our control during challenging times to maximize the impact of our strategic plan. Staying on the side of the consumer and executing our plan is and has always been our model for driving growth, regardless of the macro backdrop. Equally as important is our ongoing commitment to invest in our people. It starts with building a culture of care. The more we show restaurant teams we care, the more they show the same care for our customers. By creating the type of environment where people want to work, whether they're looking to develop skills that they can take to future jobs or planning to build a career with us, McDonald's provides a holistic employee value proposition. In turn, our people enable us to deliver an unequaled customer experience backed by the power of our brand. This is our winning formula. It's a formula we will continue to protect, especially as we work to raise our ambition and create the next great chapter of this legendary brand together. Before I turn it over to Kevin, I do want to acknowledge that our hearts and minds are with the Ukrainian people and all who have been impacted by this historic crisis that has brought new elements of uncertainty to communities around the world. Our restaurants in Ukraine and in Russia remain closed. In both countries, we have continued to pay employees and provide additional support to them and others in need. But it's clear that this crisis is far from over. With an ever-evolving situation, we are analyzing our options and expect to provide clear direction to investors and other stakeholders no later than the end of the second quarter. Now over to Kevin to walk us through our Q1 performance.

Thanks, Chris. Global comp sales were up nearly 12% in the first quarter, reflecting strong underlying performance across all segments. In most of our major markets, we sustained QSR traffic share gains by elevating our brand, accelerating digital channels, and showcasing our core equities of chicken and beef. We entered 2022 expecting it to be a year of continued recovery in our international operated markets. as several markets were still experiencing COVID-related stops and starts throughout 2021. In the first quarter, comp sales in our IOM segment increased over 20%, and average unit volumes have now surpassed pre-pandemic levels across the segment. The UK continues to be one of our strongest performing markets. In the first quarter, performance in the U.K. was fueled by sustained digital momentum and strong menu initiatives like the national rollout of McPlant and the extremely successful Chicken Big Mac promotion. In Australia, the Welcome to My World convenience campaign showcased how we make consumers' lives easier and help drive significant share gains in delivery. And the launch of My McDowell's Rewards in March has already increased app adoption among consumers. Canada also experienced strong digital growth, building on their successful fourth quarter launch of Loyalty. Over the past couple years, consumer mobility was particularly challenged in France and Germany, but we saw great improvement in both markets throughout the quarter. We highlighted our core menu in both markets with a successful QPC campaign in France and the launch of our new premium beef platform McDonald's Supreme in Germany. As Chris mentioned, the quarter also brought more macroeconomic challenges, including rising inflationary pressures and supply chain challenges, all of which were elevated by the crisis in Ukraine. All of our restaurants in Ukraine were closed at the end of February, and in early March, we made the decision to suspend operations in Russia. While these markets represented about 2% of system-wide sales in 2021, the closures had a negligible impact on consolidated sales results for the first quarter this year. In the U.S., comp sales were 3.5% for the first quarter. Higher average check, driven by strategic price increases, continued to be a significant growth driver. And strong marketing campaigns across loyalty, value bundles, and our crispy chicken sandwich delivered incremental sales and continued to drive digital adoption. Turning to the international developmental license markets, comp sales were up nearly 15 percent for the quarter. largely driven by positive comps in Japan and Latin America, partly offset by negative comps in China. In Japan, we focused on off-premise channels as a result of elevated COVID levels, meeting shifting consumer needs and continuing to grow market share. We also delivered strong growth at the dinner day part with limited-time offerings like the re-hit of the Samurai Mac and the launch of Spicy Chicken Nuggets. And in China, a surge in COVID cases and renewed government restrictions created challenging operating conditions in the quarter, resulting in temporary restaurant closures throughout the country that continue today. While comps were negative for the quarter, we expanded our app engagement with digital-only promotions, including delivery offers and subscription cards. And with that, I'll turn it back to Chris.