What explains McDonald's gross profit variations since 2022?

McDonald's gross profit margin has shown fluctuations since 2022, decreasing from 57.85% on June 30, 2022, to 57.02% by March 31, 2023, and then slightly recovering to 57.69% by December 31, 2024. These changes can be attributed to several factors: 1. **Cost of Goods Sold (COGS)**: The cost of goods sold represents the direct costs associated with the production or acquisition of the goods sold. Changes in COGS can significantly impact gross profit margins. For instance, if McDonald's faces increased costs for ingredients, packaging, or supply chain disruptions, this could lead to a decrease in gross margin. |code|Ticker|Name|Date|Gross Profit Margin|Gross Profit Margin YoY|market_code| |---|---|---|---|---|---|---| |MCD|MCD.N|Mcdonald's|2022 Q1|54.8067|3.49869698228651|169| |MCD|MCD.N|Mcdonald's|2022 Q2|57.8538|6.4533935885593525|169| |MCD|MCD.N|Mcdonald's|2022 Q3|57.6343|4.779729916444266|169| |MCD|MCD.N|Mcdonald's|2022 Q4|57.7889|5.0693900259451175|169| |MCD|MCD.N|Mcdonald's|2023 Q1|57.015|4.029251898034366|169| |MCD|MCD.N|Mcdonald's|2023 Q2|57.5911|-0.45407561819621595|169| |MCD|MCD.N|Mcdonald's|2023 Q3|57.9138|0.4849542720220402|169| |MCD|MCD.N|Mcdonald's|2023 Q4|57.838|0.08496441358115972|169| |MCD|MCD.N|Mcdonald's|2024 Q1|56.5811|-0.7610277997018351|169| |MCD|MCD.N|Mcdonald's|2024 Q2|57.3524|-0.41447376417535764|169| 2. **Pricing Strategies**: McDonald's may adjust its pricing strategies in response to market conditions, consumer behavior, or competitive pressures. For example, if the company decides to offer discounts or promotions to attract more customers, it could affect its gross margin. 3. **Currency Fluctuations**: As a global company, McDonald's operates in multiple currencies. Fluctuations in currency exchange rates can influence the cost of goods sold, impacting gross margins. A stronger US dollar, for instance, could make American-made goods more expensive for international operations, affecting margins. 4. **Inflation and Supply Chain Issues**: Inflation can lead to higher costs for raw materials, labor, and other inputs, which can compress gross margins. Supply chain disruptions can also increase costs and reduce efficiency, further impacting margins. 5. **Seasonality and Economic Conditions**: Consumer spending patterns can vary by season, affecting sales and margins. Economic downturns or uncertainty can lead to reduced consumer spending, impacting McDonald's revenue and margins. 6. **New Product Introductions and Menu Innovation**: Launching new products or menu items can initially depress margins as marketing and promotional costs are incurred. However, if these items are successful, they can contribute to higher margins over time. 7. **Operational Efficiency**: Changes in operational efficiency, such as improvements in supply chain management or reductions in waste, can positively impact gross margins by reducing costs. In summary, McDonald's gross profit variations since 2022 are likely a result of a combination of factors including cost of goods sold, pricing strategies, currency fluctuations, inflation, seasonality, new product introductions, and operational efficiency.