McDonalds 2013 Annual Report Download - page 3

To Our Valued Shareholders:
It’s a privilege to serve great-tasting, high-quality food
and beverages with the speed and convenience expected
by almost 70 million daily customers in 119 countries —
and we don’t take it for granted.
Our unique business model — comprised of the
best franchisees, excellent suppliers and talented
employees — is the reason McDonald’s is the world’s
largest quick-service restaurant brand. It’s also the
reason we continued to grow in 2013. Global comparable
sales increased 0.2%, and Systemwide sales were up
3%*. We increased operating income 3%* and diluted
earnings per share 4%*. And, we invested approximately
$2.8 billion in new and existing restaurants.
We also remain committed to returning all free cash ow
to shareholders. In 2013, we returned $4.9 billion to
shareholders through dividends and share repurchases.
Though McDonald’s continued to grow, our performance
fell short of our high expectations this past year.
Challenging conditions — including a at or contracting
informal eating out category in most of our major
markets, increased competitive activity and consumer
price sensitivity — impacted our results. In addition,
some of our customer-facing initiatives didn’t generate
the comparable sales lift and incremental guest visits
needed to overcome external pressures in today’s
highly fragmented marketplace.
We’re addressing near-term performance by optimizing
current initiatives for broader reach and better execution,
while appropriately investing to meet future demand.
As we look forward, I remain condent in the underlying
strength of our System and business model. Yes, for
us, this is about our scale. It’s also about our sizeable
marketing presence, our industry-leading cash ow
and the efciencies we’re able to capture as a result.
Building on our strengths to generate
enduring, profitable growth
Our desire to ensure the McDonald’s experience
consistently delivers on our trademark QSC&V —
Quality, Service, Cleanliness & Value — remains a
top priority. We’re also building on the competitive
advantages inherent in our business model and
focusing on the drivers within our control. Around
the world we’re:
•
Balancing core classics and new menu
choices. We’re focusing on timeless favorites such
as the Big Mac, Egg McMufn and our World Famous
Fries while broadening our appeal with new menu
options in the categories where we believe the most
growth opportunity exists: beef, chicken, beverages
and breakfast.
• Focused on improving customer service. We
often say that the interaction between our customers
and our crew at the front counter or drive-thru is the
“moment of truth.” Emphasizing important elements of
the service experience — like the stafng, scheduling
and positioning of our crew — enables us to deliver
at that all-important moment, and also improves the
restaurant’s overall capacity for change.
•
Ensuring we provide affordable options across
our menu. We are strengthening our value platforms
as we maintain an emphasis on this foundational
element of our brand promise and a key driver of the
customer experience.
• Keeping our restaurants contemporary.
With more than 1,500 re-images in 2013, nearly 60%
of McDonald’s restaurants now have more modern
interiors and exteriors.
• Growing to the real market opportunity.
We opened more than 1,400 restaurants in both
established and emerging markets last year.
As our customers evolve, so must we. We’re drawing
on deeper consumer insights to better understand
their changing preferences. And, we’re applying these
learnings across all our actions — from restaurant
execution and operations innovation to marketing
and menu.
McDonald’s Corporation 2013 Annual Report | i
*in constant currencies