2019 ANNUAL REPORT - McDonald's
2019
ANNUAL REPORT
Annual Letter
to Stakeholders
Dear Shareholders, the Global McFamily and our Customers,
It is an enormous privilege to lead this great company.
McDonald¡¯s is one of the world¡¯s great brands, but our
impact is so much more. We don¡¯t just operate nearly
40,000 restaurants, we offer 40,000 community centers
that create opportunities, connections and support
networks for tens of millions of people every day. As
a lifelong customer, some of my most enduring memories are
of times spent at McDonald¡¯s¡ªbirthday parties, family dinners,
nights out with friends, and a host of other occasions. Looking
across the whole world, it is clear how McDonald¡¯s becomes part
of the fabric of our lives.
...create opportunities, connections
and support networks for tens of
millions of people every day.
As I have spent time with people around the system, I have
seen the great pride we all have in bringing people together and
supporting our communities. This has never been more apparent
than in the last few months with the global outbreak of COVID-19.
I feel a deep sense of responsibility to protect and enhance the
role we play in the world, continuing to forge connections in
communities despite the significant challenges we all face.
Navigating through an unprecedented
global crisis
When I assumed my role late last year, the company was in an
incredibly strong position. Systemwide sales eclipsed $100 billion
and most major markets were enjoying record, or near-record,
franchisee cash flows. Since we launched the Velocity Growth
Plan, our comparable sales growth outpaced the industry, and we
had gained market share across most of our major markets.
Annual Letter
to Stakeholders
The outbreak of COVID-19, first in China and later in
every other country in which we operate, has created
a major business disruption. We are now operating
in a completely different world, with tremendous
challenges to overcome. Difficult times like these
remind us how strong, resilient and purposeful we
are when we come together, support each other and act in service
of the millions of people who count on us.
When we were first confronted with this crisis, I laid out five
principles that I wanted to guide our approach and inform our
actions every day as we navigate through this together. For
anyone in our system, living these principles comes naturally, but
I thought it was important to reaffirm them as our guiding light:
1. We¡¯re all in this together. McDonald¡¯s has a unique
operating model, and the strength of our business is rooted
deeply in alignment across the three legs of our system¡ª
company employees, independent franchisees and global
suppliers. Our top priority is to protect the health and safety
of our people and customers. That has guided our response
to date, through actions like implementing paid sick leave in
the U.S. and enhancing hygiene measures at all companyowned restaurants, as well as closing in-restaurant dining
where necessary, and working with franchisees to support
financial liquidity. We are supporting each other through this
crisis, and while we will certainly have to make some difficult
decisions as the situation evolves, we will work through
these together, as one McDonald¡¯s system.
2. Think and act with a long-term mindset. Because of the
success of our Velocity Growth Plan and our performance
in 2019, we entered this crisis in a stronger position than
most and are drawing on our strengths to ensure we are
well positioned for the long term. The journey we have
been on¡ªincluding our focus on value, delivery and Drive
Thru¡ªhas proven now to be more relevant than ever. But at
the same time, we recognize that we will need to adapt to
a new reality on the other side of this crisis and continue to
assess the necessary strategic adjustments.
3. Be transparent with each other and our stakeholders.
We understand that being open with our customers, our
system and our shareholders is key to managing through
these uncertain times. That¡¯s why we have been in regular
touch with updates, lessons learned and information to
support everyone through their own unique situations.
The work happening with our suppliers and third-party
partners is an excellent example of this in action. I¡¯ve been
impressed with how our supply chain has adjusted to the
fast-moving situation, and ramping up communication
between our teams, suppliers, partners and restaurants
has been essential to ensuring our operations remain
strong. We¡¯ll continue to communicate regularly with all
stakeholders as we navigate the road ahead.
4. Lead by example. We wouldn¡¯t ask our customers to
go where we wouldn¡¯t go, or our crew to work where we
wouldn¡¯t work. We have been making adjustments to our
operations around the world to ensure we live and lead
by example, and that has required everyone across the
system to be agile. As we assess the changing needs of
our business, we will do whatever is necessary to support
the system and safeguard the future of our company, even
if that means making difficult decisions. In light of the
significant impact that COVID-19 has had on the company¡¯s
global operations, I have volunteered to reduce my salary
by half and certain of our most senior Executives have also
volunteered to reduce their salaries by one-quarter, at least
through September 30. This follows discussions with the
Board in recent weeks, and they endorsed this decision.
5. Stay true to our purpose. We are here to feed and
foster communities and remain committed as ever to
that mission. I have seen incredible efforts across the
world, particularly by our franchisees and crew, to serve
communities in this time of need. This has included
the donation of medical supplies and free meals to
local health workers across China and the U.S. and the
creation of a hospital in Milan, in partnership with our
Ronald McDonald House Charities. In Guatemala and
Poland, our crew members have gone the extra mile by
including handwritten messages of support with meals
being donated to health care workers. There are countless
inspiring examples like these around the world, and I am
proud of the way the system has banded together to stay
true to our purpose.
Annual Letter
to Stakeholders
The true spirit of McDonald¡¯s
This global crisis has revealed the true spirit
of the McDonald¡¯s system, with everyone
working hard to help keep our business
running at a time when our communities need
us most. We are working with health officials
and outside experts to inform our response. That, coupled with
the experience of our seasoned leadership team, has and will
continue to be critical to ensuring we make the right decisions
and support our people along the way.
...everyone working hard to keep our
business running at a time when our
communities need us most.
To that end, we also recently announced Heidi Capozzi as our
Executive Vice President and Global Chief People Officer. She
is a collaborative, results-oriented business leader with proven
experience. I am proud and grateful to have such a talented team
in place to lead our company¡ªat all times, but especially now.
Evaluating our future strategy
Looking ahead, we know that the world will look very different on
the other side of this crisis and are taking the necessary actions
to ensure we are best set up for an altered business landscape.
Our Velocity Growth Plan provides a consistent framework, but
we will need to ensure our go-forward strategy also reflects
the new operating environment. We are looking at all of the
situations that could unfold and will provide updates through
the year.
In any case, I am confident in the resilience of our business and
the strong foundation we have built. McDonald¡¯s has seen a lot
over our 65 years, and while this is the most challenging global
crisis in our company¡¯s history, we remain confident that we are
well positioned for the long term.
Supporting our people and communities
As we manage through this situation, protecting the well-being of
our people, our customers and our broader communities remains
our number one priority and guides every decision we make.
We are all too aware that many of our communities around the
world face extraordinary challenges, and that won¡¯t change any
time soon. But when communities are in real need, our business
and franchisees step up to help. Amid these fast-moving and
difficult realities around the world, we will continue to show up in
our communities when they need us most, whatever challenges
they may face. That is something I am certain will never change.
Thank you to our shareholders for your continued investment
in McDonald¡¯s, to our customers for your continued support
and enjoyment, and to the entire system for all you do every day
to serve customers and communities around the world. I am
honored as ever to serve as your CEO.
Be well,
Chris Kempczinski
President and CEO
McDonald¡¯s Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 1-5231
McDONALD¡¯S CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
36-2361282
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
110 North Carpenter Street, Chicago, Illinois
60607
(Zip code)
(Address of principal executive offices)
Registrant¡¯s telephone number, including area code: (630) 623-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
MCD
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (¡ì232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of ¡°large accelerated filer,¡± ¡°accelerated filer,¡± ¡°smaller reporting company,¡± and "emerging growth company" in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
No
The aggregate market value of common stock held by non-affiliates of the registrant as of June 28, 2019 was $157,661,991,693.
The number of shares outstanding of the registrant¡¯s common stock as of January 31, 2020 was 745,446,655.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates information by reference from the registrant¡¯s 2020 definitive proxy statement, which will be filed no later than 120 days
after December 31, 2019.
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