The company reaffirmed its long-term average constant currency growth targets for systemwide sales growth of 3% to 5%, operating income growth of 6% to 7%, and return on incremental invested capital in the high teens. In its outlook for 2014 McDonald’s forecast a capital spending budget of $5.9 to $6 billion that would allow for the opening of 1,500 to 1,600 new stores and for the remodeling of about 1,000 existing stores.
McDonald’s also forecast an increase of 1% to 2% in the cost of a basket of commodity goods in the U.S. Commodity costs are expected to rise by 1.5% to 2.5% in Europe. General and administrative costs are also forecast to rise by $200 million next year.
Thompson said:
Given the resilience and stability of our business model, we believe that our average annual constant currency growth targets remain realistic and achievable and keep us focused on making the best decisions for the long term. These targets continue to align our System behind growing sales and profitability to generate strong returns. While the fundamentals of our business have not changed, when we look at the market dynamics for 2014 we do not see material changes versus 2013.
The company also said it plans to return $4.5 to $5 billion to shareholders in 2014 through a combination of dividends and share buybacks.
McDonald’s fourth-quarter forecast made less than a month ago when the company reported third-quarter results did not include any hard numbers. Instead, the company said that fourth-quarter sales would be in-line with recent quarterly trends while restaurant margin percentages are expected to decline at a level relatively similar to third-quarter results.
This is the company’s long-term plan? To hope that it’s wrong about its own forecasts. Mickey D’s shareholders ought to demand better than this.
McDonald’s shares are trading down about 0.6% Thursday afternoon at $97.52 in a 52-week range of $83.31 to $103.70.
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