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.

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download