McDonald's Corporation

and welcome to McDonald's First Quarter 2024 Investor Conference Call. After 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's Corporation. Mr. Seplak, you may begin.

Good morning, everyone, and thank you for joining us. With me on the call today are President and Chief Executive Officer Chris Kamczynski and Chief Financial Officer Ian Borden. As a reminder, the forward-looking statements in our earnings release and 8-K 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 conference 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. I join you today inspired from our recent worldwide convention, a time when McDonald's comes together to celebrate the success of our system, the relevance of our brand, power of our Accelerating the Arches strategy, and the collective strength of our system were on full display as we welcomed our global McDonald's franchisees, restaurant teams, suppliers, and company employees to Barcelona. For the first time in our nearly 70-year history, we held this biennial reunion outside of North America, a testament to the global power of our brand. And we're joined by more than 15,000 attendees from nearly 100 markets to discuss how we're reimagining the future across our three-legged stool. It's clear that McDonald's continues to operate from a position of strength across nearly all areas of the business as we focus on executing the day-to-day at a high level and establishing strong platforms for long-term sustained growth. The first quarter of 2024 marks our 13th consecutive quarter of positive comparable sales growth with 30% growth over the last four years. This success was built by establishing a strong foundation with a strategic plan basing consumer insights, and focus on creating relevant marketing campaigns with our brand connected to culture. At the same time, we're maximizing the strength of our core menu equities and building an industry-leading loyalty base. Combined with our modernized restaurant estate, strong franchisee alignment, engaged restaurant employees, and strong restaurant-level unit economics, McDonald's is well-positioned. This winning formula continues to drive results, And our customers visiting our restaurants today can easily see our commitment to providing them with a great experience, evident through our strong customer satisfaction scores. As I reflect on the first quarter of the year, it is clear that broad-based consumer pressures persist around the world. Consumers continue to be even more discriminating with every dollar that they spend as they face elevated prices in their day-to-day spending, which is putting pressure on the QSR industry. It's worth noting that in Q1, industry traffic was flat to declining in the U.S., Australia, Canada, Germany, Japan, and the U.K. And across almost all major markets, industry traffic is slowing. In the context of a difficult macro environment for the industry, we know our customers are looking for reliable everyday value now more than ever. That has always been our promise to deliver delicious feel-good moments at an affordable price each and every day. Staying on the side of the consumer and executing against our plan is our model for driving long-term growth, regardless of the broader landscape. This was the case nearly 70 years ago when Ray Kroc opened the very first McDonald's, and this remains just as true to this day. As consumer pressures have mounted, we've reacted with agility to proactively meet evolving customer needs. For example, over the past year, We've launched everyday value menus across many of our international markets, including all five of our big IOM markets. Featuring value bundles at various price points, these new offerings provide smaller, more affordable meals to our customers. In Germany, our McSmart menu has continued its strong performance with record units sold during the first quarter. And in other markets like Spain, our everyday value menu features a convenient bundle for every price point which continues to drive results. I recently spent time with our market team in Poland and experienced firsthand their renewed focus on value in an environment where significant inflation has created challenging consumer dynamics. In light of these challenges, I was impressed by the market's ability to quickly identify an opportunity in their everyday value offerings to implement a new entry-level value platform which is driving traffic back into our restaurants. And in France, a market which I flagged last quarter, I've been impressed by the speed with which our team and franchisees have moved to address their opportunities. The market now has established their own McSmart value menu with high consumer awareness, which is driving encouraging progress in their business trends. It's clear that McDonald's offers delicious food at a great value, and customers continue to tell us this through our survey work. That said, we must be laser-focused on affordability which means good entry-level price points available every day. In the markets where we're doing this well, the business is outperforming. In some markets, however, it's clear we still have opportunities to strengthen our proposition. As we continue to take a one McDonald's approach to solving problems, the unique size and scale of the McDonald's system gives us the ability to learn from each other, and it's examples like our success with the McSmart value menu construct that we will look to replicate further. McDonald's has a long history of being the go-to destination for value and it's imperative that we continue to keep affordability at the forefront for our customers. We literally wrote the playbook on value and we are committed to upholding our leadership within the industry. As we've done for the last 70 years, our teams in those markets are working closely with our local franchisees to balance menu pricing decisions with the right affordability strategy in place and where needed, get more aggressive with our value offerings. Despite the elevated cost environment we've navigated over the past couple of years, average franchisee cash flow and the corresponding margins remain strong. And thanks to the financial strength of our restaurant P&Ls, we have the ability to invest in these traffic driving initiatives. Despite these ongoing challenges and pressured consumer spending across our segments, we delivered global comparable sales growth of nearly 2% in the first quarter. and we continue to raise the bar on the customer experience in our restaurants with a focus on strong execution. This is driving improved service times and higher levels of customer satisfaction across our markets. In challenging times, there is significant power in focusing on what's within our control to maximize the impact of our strategic plan, offering our customers delicious food at unparalleled value and convenience. And it's exactly this approach that will continue to drive growth. McDonald's is best positioned to win in the industry because when we combine our strong system alignment with our fully modernized estate, a globally recognized brand, delicious food on our core menu, and the highest level of execution across our four Ds, no competitor can match us. As consumer spending remains pressured and macro headwinds continue, we are laser focused on maintaining our competitive advantages and growing QSR market share. With that, I'll turn it over to Ian to talk more about our Q1 results.