McDonald’s Corporation (NYSE:MCD) Q4 2022 Earnings Call Transcript

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But we need to be very smart about where and how we do that. And I think sometimes in the past, we were looking at just putting units and looking at an absolute number and not maybe looking at the quality of the site. And so that’s why we want to take some time this year to make sure we feel confident about the exact number, the pacing, the quality of the site so that when we do roll that out that we’ve got the ability to continue to drive both comp sales as well as unit growth. And then your question about the organization, there’s maybe some similarities with differences. I think if you go back to what was done in — I think it was 2016 or thereabouts, I mean that was savings that largely came about through refranchising a big chunk of our restaurants.

And so that was — as we took McOpCo percentage down and we moved more of that to the franchise side, that gave us some benefits from a G&A standpoint. There were some changes that happened in terms of delayering at the senior level. But what — that effort was not about is ways of working. That was much more kind of, what I would say, are just business model approaches as opposed to ways of working. And what I’ve seen in my time in this job and also what I’ve seen in the U.S. when I was in that role is that we have a lot of opportunities to get faster, more innovative, more efficient. And it’s because we have historically been very decentralized in some areas where we reinvent the wheel way too often. And I think the other thing that we’ve seen is we haven’t been as sharp around our global priorities and so there’s been proliferation of priorities that sometimes happen at the market level.

I would just give you an example. As we’re going through this ATO exercise and learning about where we have the opportunities, we’re uncovering all sorts of interesting things, like, for example, one market that has 300 priorities. Well, of course, you can’t have 300 priorities, and you can’t resource 300 priorities. And so as we discover and learn these things, this is all going to be about making us better. So the difference of today versus what we did maybe back in 2016, I think that was much more of a structural change related to our franchising model with some delayering at the senior level. This is much more fundamental about changing ways of working that I think ultimately are going to make us better both on the top line, but I think are also going to give us efficiencies that flow through, as Ian was talking about with G&A leverage.

Mike Cieplak: Our next question is from Jon Tower with Citi.

Jon Tower: Great, thanks for taking the question. Just curious, I know we’ve spoken quite a bit about some of the cost inflation and stuff like that running through the business across the globe in 2023. Curious if you can give us an indication on your thoughts regarding pricing versus the inflation expectations for the full year and how you’re working with your franchisees across the globe to address that? And then second, if you could talk about the quarter-to-date industry data, particularly in the U.S., it’s been quite strong to start the year. Curious to know if some of the strength that McDonald’s saw in the fourth quarter has carried over into the first quarter? Thank you.

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