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McDonald’s stock dips amid service changes due to COVID-19

The company said it is considering offering rent deferrals to its franchisees to maintain stability amidst the current uncertainty.

Shares of McDonald’s Corp. (NYSE: MCD) were down 1.5% in midday trade on Tuesday after the company announced that it would close seating areas at its company-owned restaurants in the US and shift to take-out and delivery options due to the coronavirus situation.    

The fast food chain said that it will close dining areas, including self-service beverage bars and kiosks, at its locations and serve customers through delivery, drive-thru, and walk-in take-out facilities. The company will also close all PlayPlaces at its US locations.

These decisions were taken in the wake of the increasing health regulations brought on by the COVID-19 outbreak. McDonald’s has encouraged its independent franchisees also to adopt these measures.

McDonald’s also stated in a regulatory filing that its restaurant operations in several markets worldwide have been disrupted by the coronavirus outbreak and that it currently cannot estimate the exact negative financial impacts to its results.

The company said it is considering offering rent deferrals to its franchisees to maintain stability amidst the current uncertainty. It is also working with suppliers in order to maintain continuous supply.

McDonald’s said most of its restaurants in the US are offering only drive-thru, delivery and take-away services. Markets like France and Canada also have limited operations, including the abovementioned services, while markets such as Italy and Spain have closed all restaurants.

However, most of the company’s restaurants are operating in Japan and in China, around 95% of restaurants are open. Operations in other countries are based on government regulations.

For its most recent quarter, McDonald’s beat revenue and earnings estimates. Revenues rose 4% while comparable sales grew 5.9%.

The stock has dropped 33% over the past one month.

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