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McDonald's (MCD) Halts Reopening of Dining Rooms for 21 Days

·3 min read
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McDonald's Corporation MCD recently halted the reopening of additional dining rooms in the United States by 21 days on account of rising number of coronavirus cases. Over the last two weeks, the country has witnessed an increase of 65% in coronavirus cases. Following the news, the company’s shares declined nearly 1% in after-hour trading session. Year to date, the company’s shares have gained 6.5%, against the industry’s decline of 9%.

The company started reopening dine-in service in May. McDonald's has already reopened dining rooms in 2,200 restaurants out of 14,000 restaurants in the country. However, the restaurants continue to operate via off-premise.

Restaurants with reopened dining rooms are likely to consult local and state officials on whether to cease the dining rooms services again.

Coming to international markets, most of the restaurants in France, Italy, Spain, United Kingdom, Australia and Germany have resumed operations. Notably, the restaurants are operating with drive-thru and delivery services, and dining room access with limited capacity.

Comparable Sales Hurt by Pandemic

In the month of April, comparable sales in the U.S. and International Operated Markets were down 19.2% and 66.7%, respectively. However, for the month ended May 31, the metric fell only 5.1% and 40.5% at the U.S. and International Operated Markets, respectively.

Total comparable sales improved from a decline of 39% (for the month ended Apr 30) to a decrease of 20.9% (for the month ended May 31). Quarter to date ended May 31, total comparable sales declined 29.8%.

In a bid to recover business post coronavirus-induced shutdowns, McDonald's continues to follow regulatory guidelines amid store re-openings to ensure health and safety of customers and employees.

McDonald's currently carries a Zacks Rank #3 (Hold).

Key Picks

Other top-ranked stocks in the same space are Jack in the Box Inc. JACK, Wingstop Inc. WING and Domino's Pizza, Inc. DPZ. Jack in the Box and Wingstop sport a Zacks Rank #1 (Strong Buy), while Domino's carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jack in the Box’s 2021 earnings are expected to rise 22.8%.

Wingstop has a three-five year earnings per share growth rate of 11%.

Domino's beat the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 12.7%.

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Click to get this free report Jack In The Box Inc. (JACK) : Free Stock Analysis Report Dominos Pizza Inc (DPZ) : Free Stock Analysis Report McDonalds Corporation (MCD) : Free Stock Analysis Report Wingstop Inc. (WING) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research