McDonald's CEO Talks Recovery, Breakfast, Food Shortages And More

McDonald's Corp MCD reported a 3.4% decline in same-store sales in its first-quarter earnings, but it's difficult to model any progress as different countries are at different stages in their coronavirus response.

McDonald's reported quarterly earnings of $1.47 per share, which missed the analyst consensus estimate of $1.57. This is a 17.4% decrease over earnings of $1.78 per share from the same period last year. The company reported quarterly sales of $4.714 billion, which beat the analyst consensus estimate of $4.650 billion.

Inconsistent Recovery Worldwide

It's difficult to model how McDonald's is recovering as a whole across the world given mixed trends and different consumer profiles, CEO Chris Kempczinski said on CNBC's "Squawk on the Street." For example, trends in the U.S. started to improve in late April while the company is only now opening stores after completing pausing operation in Italy, Spain, France and the United Kingdom.

Nearly 100% of all stores in China are open but consumers are still hesitant to return, the CEO said. A "slow recovery" is expected after all locations are completely closed.

"It's really tough to generalize -- lots of different scenarios playing out," he said.

Breakfast Weakness

McDonald's saw weakness during breakfast hours and Kempczinski this is a function of a disruption in a typical morning routine where consumers pick up breakfast on their way to work. Breakfast is a category likely to be the slowest to rebound, at least based on trends observed when thousands of stores were temporarily closed for renovations and upgrades.

Nevertheless, breakfast remains a very important category for McDonald's and Kempczinski said he's confident future sales will return to pre-pandemic levels in terms of percentage of overall sales.

Beef Shortages

McDonald's has yet to see a single component of its supply chain breakdown at any of its restaurants, including food, packaging and materials. However, potential disruptions in the food supply is "concerning" and management is monitoring the situation "hour-by-hour."

"Our expectation is that [our suppliers] will make sure they do everything they can to guarantee our supply," Kempczinski said.

Era Of COVID-19

Consumer wants and needs will shift in a post coronavirus world and McDonald's is fortunate to already have a compelling drive-through system, he said. Moving forward it's likely delivery orders, mobile pay options, curbside options will grow in size as consumers change how they go about in their daily lives.

Dine-in will still remain an "important part" of McDonald's but "time will tell" just how significant it will be to sales.

The stock traded around $185 per share at time of publication.

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