What is driving SG&A at McDonald’s?

Market Realist

Understanding McDonald's: Comprehensive company primer and profitability analysis (Part 12 of 21)

(Continued from Part 11)

Consolidated selling, general, and administrative (SG&A) expenses increased 3% (4% in constant currencies) in 2012 and increased 3% (flat in constant currencies) in 2011. The growth rate for 2012 was primarily due to higher employee costs, the 2012 London Olympics sponsorship, higher technology-related costs, and the 2012 Worldwide Owner/Operator Convention—partly offset by lower incentive-based compensation.

The growth rate for 2011 was flat, as higher employee and other costs were offset by lower incentive-based compensation and costs in 2010 related to the Vancouver Olympics and the company’s 2010 Worldwide Owner/Operator Convention.

Selling, general, and administrative expenses as a percent of revenues were 8.9% in 2012 and 2011, and 9.7% in 2010. Selling, general, and administrative expenses as a percent of system-wide sales were 2.8% in 2012 and 2011, and 3.0% in 2010. Management believes that analyzing selling, general, and administrative expenses as a percent of system-wide sales as well as revenues is meaningful because these costs are incurred in order to support the overall McDonald’s business.

Continue to Part 13

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