Ian Frederick Borden
Executive VP & Global CFO at McDonald's
Thanks, Chris, and good morning, everyone. As Chris mentioned, the second quarter was yet another demonstration of consistently strong performance, guided by our Accelerating the Arches strategy and fueled by our outstanding execution. We're delivering delicious feel-good moments to our customers in new and exciting ways by doubling down on our creative excellence and highlighting our core menu, all with the value and convenience our customers expect. Our performance speaks for itself and is a testament to the passion and dedication of our entire McDonald's system. With global comparable sales of 11.7% and consistent performance across our segments, it's clear that the McDonald's brand has never been stronger. In fact, the brand was at the center of this quarter as we engage with customers in authentic and culturally relevant ways with campaigns rooted in consumer insights. As Chris touched on a few minutes ago, we took the nostalgic experience of celebrating birthdays at McDonald's and repackaged it for a new generation with none other than Grimace at the center.
It quickly became one of our most socially engaging campaigns of all time with millions of reactions on our social media posts, a true demonstration of how the power of our brand emerges in organic and creative ways in our fans. It contributed to the strong double-digit comparable sales growth for the quarter in the U.S. The passion for the brand was also evident in Italy with the launch of a truly unique creative platform, it celebrated the most loved and best-selling beef burger in the market by asking customers, "What would you do for a Crispy McBacon?" The answer came in the form of customers getting tattoos of their favorite McDonald's sandwich, driving brand affinity and elevating share gains. I've certainly seen a lot in my 30 years at McDonald's, but this was a new one for me. Truly remarkable. As I mentioned before, our chicken equities remain at the core of our growth strategy. The U.K. celebrated the 40th anniversary of another fan favorite, the Chicken McNuggets by offering limited time sauces to reconnect with the Gen Z consumer. This was coupled with compelling media that showcased the fan truth that sharing your nuggets isn't guaranteed, even if your best friends. China also highlighted the Chicken McNuggets anniversary in a creative way with an integrated marketing campaign. Featuring our 20-piece nuggets, it quickly went viral on social media and generated significant positive buzz among consumers.
Spicy McNuggets, one of our most popular line extensions, were offered across various markets this quarter, including Australia and Germany. It is yet another example of how we modernize our core menu, adapt it to meet changing customer taste profiles and scale these new ideas across the globe. Both markets achieved significant lift to the McNuggets line as a result, and Spicy McNuggets sales reached an all-time high in Australia. Our ambition on chicken includes further scaling emerging equities across markets. The McCrispy chicken sandwich, for example, has now scaled to over 10 of our largest markets, including Spain just this past quarter. The sandwich is already resonating with our customers, bringing attention to our chicken portfolio and driving significant chicken share gains. A recent addition to our portfolio of billion-dollar brands, the McCrispy continues to be an important catalyst of chicken growth for many of our markets. The U.K., for example, has achieved market share leadership in chicken, a remarkable growth over the past few years with the launch of both the McCrispy and the McSpicy chicken sandwiches. We look forward to further scaling these new global favorites to customers around the world. A challenging macro environment, including rising interest rates and elevated costs, continues to create volatile consumer confidence levels and put pressure on consumer spending. Providing customers with an affordable option has always been core to McDonald's. But in these challenging times, it is even more important for us to remain agile, proactively meeting the needs of our customers. Germany continued the success of its McSmart menu. Initially introduced last quarter to provide entry-level affordable meals, it's contributed to our best sales quarter ever in the market and lifted value perceptions with consumers.
The U.K. unveiled a similar offering with its new Saver Meals deals in June, and the early results are encouraging. A permanent addition to the menu, it aims to provide consistent everyday affordability and ensure customers can still enjoy their favorite treats like the Double Cheeseburger despite the rising cost environment. Maintaining our leadership position in value is crucial to future success, and McDonald's holds the #1 position in good value for money and affordability across most of our major markets. This shows that even in the most challenging of environments, our customers know that they can rely on McDonald's to provide an affordable destination for the food that they love. But we know that customers' perceptions on value are made up of more than just the price of our food. It's also about the experience that we provide. We've continued to enhance the customer experience, providing the seamless and memorable interactions our customers have come to expect. Last quarter, we introduced an enhanced ordering process through our app in the U.S. with the goal of delivering a faster and more enjoyable experience for the customer. While we're still learning from this deployment, early results have been extremely positive with elevated sales initiated through the app, increased customer satisfaction and improved service times. Canada also introduced new experiences in the app with the launch of the Frequent Fryer Program. Tapping into Canadians passion for travel, the digital campaign celebrated McDonald's fries and the opportunity to taste them in other countries.
This creative approach to reengage with our loyalty members resulted in lifts to both digital acquisition and digital customer frequency during the campaign. Now in over 50 markets across the globe, we're continuing to build stronger relationships with our loyalty customers and fueling growth of our digital sales in the process. In our top six markets, digital sales represent nearly 40% of system-wide sales, and our loyalty members remain highly engaged with over 52 million 90-day active members across our top six markets. As our relationships with these customers continue to grow, we will unlock additional customer needs and explore investments for continued digital innovation at a scale that only McDonald's can achieve. Strong execution across all elements of Accelerating the Arches is creating additional customer demand and share gains across most of our major markets. but we recognize that we're operating in a challenging macro environment where costs remain elevated, customer discretionary spending is limited and industry traffic is pressured. In line with industry trends and as inflation begins to normalize later in the year, we expect top line growth to moderate.
Turning to the P&L. Our strong top line performance across each of our segments drove adjusted earnings per share of $3.17 for the quarter, an increase over the prior year of 25% in constant currencies, excluding other charges and gains in both periods as well as a prior year tax settlement. Our company-operated margin performance for the first half of 2023 is in line with our expectations and remains hampered by continued cost pressures. As we look to the remainder of the year, we expect macro headwinds will continue. Total restaurant margin dollars grew by nearly $450 million in constant currencies or nearly 14% for the quarter. Strong franchise sales performance continues to be offset by targeted and temporary franchisee assistance, provided mainly to our European franchisees where elevated costs continue to pressure restaurant cash flows. We're still anticipating that these efforts will have an impact of $100 million to $150 million for the year. G&A for the quarter decreased 6% in constant currency, primarily driven by prior year costs incurred for our worldwide convention last April and timing of anticipated current year spend. We are pleased with our strong adjusted operating margin of just over 47% for the first half of the year. This was driven by the continued strong top line growth that I mentioned and timing within our G&A spend. For the full year, we now expect adjusted operating margin to be about 46%, reflecting heavier G&A spend in the back half of the year, along with an expected property gain in other operating income in quarter 4. And our adjusted effective tax rate was just over 18% for the quarter. And with that, let me turn it back over to Chris.
