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What's going on?

McDonald’s reported quarterly earnings on Thursday that were below expectations, but theres a light at the end of the golden arches.


What does this mean?

Europe was crippled yet again by another wave of lockdowns last quarter, and McDonalds felt the impact: it sold fewer Big Macs and McFlurries, and spent more on safety equipment and marketing itself as a home delivery go-to. That one-two punch hurt its revenue and profit, which came in below analysts’ forecasts.

But there was better news on home turf: the companys sales in the US jumped to 5.5% from the previous quarters 4.6%. That might have something to do with the fact it has more drive-throughs than it does in Europe, making it a whole lot easier to maintain social distancing rules. Its promotional pushes seemed to be working too, with long-standing favourites and newfangled crowd-pleasers alike selling like hotcakes.

Why should I care?

The bigger picture: Drive-throughs never looked so good.

Big chains like McDonalds and Starbucks which reported strong earnings of its own earlier in the week are doing better than the rest of the restaurant industry. That might be because of their sheer size: they can adapt to social distancing guidelines more easily than their independent rivals, and offer cheap, no-frills food in these tough economic times. And the future looks bright: analysts reckon McDonalds will dominate the restaurant industry even once the pandemic’s lifted.

Zooming out: Americans are turning to burgers and booze.
Americans werent just tucking into fast food last quarter: the worlds biggest spirit maker Diageo reported a surprise surge in sales for the six months till January compared to the previous year. Turns out Americans have been drinking more tequila at home than Europeans arent drinking in bars. And thats in keeping with wider drinking trends during the pandemic: everyone is choosing spirits over beer and wine during the pandemic, and trying to turn nights in into well, nights out.

Originally posted as part of the Finimize daily email.

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