A little more than a year ago, CEO Chris Kempczinski proclaimed McDonald’s was entering its “next great chapter.”
And he wasn’t wrong.
The burger giant’s systemwide sales grew 21 percent to more than $112 billion last year, a new record. Also, U.S. same-store sales lifted 13.8 percent in 2021, year-over-year, lapping the 0.4 percent bump in 2020. This is the highest-recorded comps performance since the chain began reporting the metric in 1993, and it marks the seventh straight year of positive domestic same-store sales.
Franchisees, which make up 95 percent of the U.S system, experienced record-breaking cash flow, with average growth of $125,000 per restaurant. That puts operators over $500,000—a 50 percent increase in the past three years. The company also posted unprecedented operating income of more than $10 billion.
“It’s clear there has never been a better time to be a part of brand McDonald’s than right now,” Kempczinski said during the chain’s full-year and Q4 earnings call.
Domestic same-store sales largely benefited from average check growth, driven by pricing of just over 6 percent in 2021. Traffic remained on pace with 2019 for the most part, with monthly dining visits rising 2.1 percent, 3,8 percent, and 1.1 percent in August, October, and December, according to Placer.ai data.
Same-store sales at International Operated Markets increased 21.6 percent in 2021, or 3.4 percent on a two-year basis, while comps at International Developmental Licensed Markets grew 16.6 percent, or 4.4 percent on a two-year stack.
McDonald’s ended the year with 13,443 domestic units, a net decline of 239 locations. That comprises 12,780 franchises and 663 company-operated stores. Globally, there were just north of 40,000 restaurants, or net growth of 838 outlets. China, which finished 2021 with 4,395 stores, saw net new unit expansion of 608 units, the most of any country.
The chain projects between $2.2 billion and $2.4 billion in capital expenditures for 2022, with about 40 percent allocated to the U.S. business. Globally, the brand aims to open more than 1,800 restaurants, and achieve net new unit expansion of about 3.5 percent—the best growth rate in more than 20 years, according to financial analysis firm BTIG.
“While we find it a little peculiar that McDonald’s and other large chains are accelerating development in the face of sky-high labor costs and shortages, we believe these brands could see an opportunity to take more share from smaller chains and independents,” BTIG analyst Peter Saleh said in a note.
Of those 1,800 (gross) restaurants, more than 500 will come in the U.S. and International Operated Markets, while the remaining 1,300 will open in International Developmental Licensed Markets, including 800 in China.
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BTIG estimates the U.S. will see 150–200 net new locations, which would be the first year of positive growth in eight years.
CFO Kevin Ozan said capital expenditures were lower than originally anticipated in 2021 for a variety of reasons, such as delays in obtaining permitting and construction materials. He believes the environment is improving, but it’s still not back to where it was prior to COVID.
“But the  guidance we’ve provided related to both CapEx and openings, we feel pretty good about both of those, but we’ll keep an eye on those as the year progresses to make sure that it’s advancing the way we expect right now from a supply chain perspective,” he said.
In Q4, U.S. same-store sales rose 7.5 percent year-over-year, and 13.4 percent on a two-year basis, with growth across all dayparts. Menu and marketing promotions like the McRib, Crispy Chicken Sandwich, and Mariah Carey’s 12 Days of Deals, contributed to increases, as well as major expansion in digital channels.
Comps at International Operated Markets lifted 16.8 percent in Q4, or 8.2 percent on a two-year basis, thanks to strong performances in France, the U.K., Italy, and Germany. At International Developmental Licensed Markets, same-store sales increased 12.3 percent in Q4, or 10.1 percent on a two-year stack. The growth was partly offset by negative comps in China due to COVID surges.
Digital sales surpassed a record $18 billion in 2021 and mixed more than 25 percent in the chain’s top six markets. In some countries, digital accounts for north of 50 percent, like China and France.
MyMcDonald’s Rewards, the single-biggest driver of digital adoption, exceeded expectations in enrollment and participation, Kempczinski said. After launching in the U.S. six months ago, there are more than 30 million loyalty members and 21 million active users earning rewards. The program boosts frequency by more than 10 percent.