McDonald's pins hope on reopenings as global sales fall 30%

FILE PHOTO: A McDonald's restaurant sign is seen in Swansea, McDonald's reopened all drive thru restaurants today, following the outbreak of the coronavirus disease (COVID-19), Swansea, Wales, Britain, June 2, 2020. REUTERS/Carl Recine

(Reuters) - McDonald's Corp MCD.N said on Tuesday its global sales fell about 30% in the first two months of the current quarter due to the COVID-19 pandemic even as it signaled a recovery in demand as it starts to reopen restaurants around the world.

The fast-food chain said demand had improved significantly from April to May as many of its restaurants began serving diners, especially in the United States. While overall same-store sales fell 39% in April, they declined 21% in May.

Several U.S. states have lifted restrictions that were imposed to curb the spread of the coronavirus. During the lockdowns, fast-food restaurants had to limit operations to drive-thru, takeaway and delivery through third-party apps as dining-in remained closed, which led to lower sales.

Globally, McDonald’s current-quarter comparable sales were mainly hurt by the closure of all of its restaurants in France, Spain, the United Kingdom and Italy in April, the company said.

In the UK and some European countries, McDonald’s began reopening restaurants in May after being completely shut for several weeks.

Current-quarter comparable sales in the two months ended May 31 fell 12% in the United States, the burger chain said. However, the decline was more pronounced in April with a 19% fall, while in May they fell only 5%.

The company now plans to boost advertising spending by $200 million as a part of its recovery plan to ride out the crisis. The investment will be recorded in the second quarter.

“The steps we are taking in response to the pandemic and to accelerate recovery ... will position us well for the next phase of this crisis,” Chief Executive Officer Chris Kempczinski said in a statement.

Reporting by Nivedita Balu in Bengaluru and Hilary Russ in New York; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty