McDonald’s Corporation (NYSE:MCD) Q2 2023 Earnings Call Transcript

And I believe that’s fundamentally connected to decisions like this because they keep our system fully aligned, they keep our system front footed and focused on the opportunities that we have to continue to drive growth in our business. I believe that’s a significant strategic advantage that we have. And I think it’s been a key contributor to why we continue to outperform even in markets that maybe more difficult from a macroeconomic context.

Chris Kempczinski: And I would just add, again, back to my market visits that I’ve done in the last couple of months. In some of those conversations that I’ve had with franchisees, I typically do dinners every time I visit the market with a group of franchisees. And many of them in our IOM markets specifically have thanked us for the support that we’re giving and attributed their willingness and ability to focus on the long term to not necessarily just be chasing pricing in the short term because they understand we’re in this together, we’re both making investments to ensure that the success of our business is long term focused. So I think Ian hit it exactly right. When we make the decisions and do the right things for the long term, the benefits time and again we’re proven right on that. And I feel very good about the program that we’ve got in place. And it is temporary and targeted as it appropriately should be.

Mike Cieplak: Next question is from Sara Senatore with BofA.

Sara Senatore: I guess a couple of questions around the margins, please. First, on the G&A. Could you just talk a bit about what the back half spending might be on? You sort of come in pretty decently below the full year guide. So I’m just trying to understand what the step-up might be and how to think about that G&A as a percentage of system sales maybe even going forward. And then could you just give us some color on pricing and commodity basket inflation for the US and the IOM markets. I’m sorry if I missed it. But just how much price is on the menu and what the baskets look like?

Ian Borden: Well, let me start with G&A. just I mean, I think a bit of a headline there. I mean I think our normal, let’s call it, cycle of spend in the business is probably always a little bit more back half than front half weighted. I think this year, that’s a little bit more pronounced. I think there are kind of a couple of probably more substantive factors for that. I think the first one is around our continued investment in technology and digital. I mean, I think you’ve heard us talk, and me in particular previously, that we will — we have the capacity and the capability. And we will continue to invest in areas in the business where we believe there’s a significant opportunity to drive growth and generate a return. And I think our digital and technology investments have been a clear strong example and continue to be one of our key growth drivers.

And I think as Chris touched on previously, we continue to believe we’ve got significant opportunity as we go forward to unlock further capabilities around our digital and technology platforms. And so we’re continuing to accelerate investment in those areas. I think the second one is back to our global business services organization. As you know, as part of our ATO changes earlier this year, we stood up a global business service organization at an enterprise level because we felt there was a relatively significant opportunity to look at how we can digitize, I’ll call it, the operational part of our business and drive sustainable efficiencies as we go forward. So we’re doing a fair bit of work and investing right now and looking at that opportunity to understand how big is it, what’s it going to take to get after it, how should we think about sequencing and prioritizing the investments.