Ian Borden: Thanks, Chris. As we’ve discussed, we continue to operate in a challenging environment with varying levels of headwinds across our markets. Looking ahead to this year, we anticipate these headwinds will continue as the current macro dynamics continue to weigh on both our consumers and our business results along with the war in the Middle East. As we navigate these ongoing challenges, continuing to execute at the highest level with a laser focus towards growing market share will be critical. It’s clear that we’ve had exceptional success over the last four years with strong broad-based momentum and global comp sales of over 30% when compared to 2019. It’s truly remarkable. But as we’ve mentioned before, we anticipate 2024 comp sales growth will continue to moderate as we return to a more normalized level of growth with expectations closer to historical averages of between 3% and 4% in our U.S. and IOM segments.
And in IDL, we do not expect to see meaningful improvement until there is a resolution in the Middle East. We expect our net restaurant expansion in 2024 along with restaurants we opened in 2023 will contribute nearly 2% to system wide sales growth as we begin to accelerate our new unit development and make progress against our target of 50,000 restaurants by 2027. With expectations of moderating sales growth and ongoing inflationary headwinds, we expect our company operated margin percent will remain pressured in the near term and we expect the full year 2024 company operated margin percent will be relatively in line with 2023. Turning to G&A, the financial strength of our system enables us to invest in areas that will drive long term efficiencies for our people and for our stakeholders.
We expect 2024 G&A as a percentage of system wide sales to be about 2.2%, which reflects elevated investments in technology, digital and global business services or GBS. Through these investments we’ll look to run the business more efficiently over time, and ultimately free up more resource to continue to drive long-term growth. Despite headwinds throughout the P&L, we anticipate an operating margin of mid to high 40% in 2024, driven primarily by top-line growth and franchise margin performance. We’re projecting interest expense this year to increase between 9% and 11% compared to 2023 due to higher average debt balances and interest rates and we expect our effective tax rate for the year to be between 20% and 22%. Transitioning to capital expenditures we plan to spend between $2.5 billion and $2.7 billion this year, more than half of which will be dedicated to new unit openings across our U.S. and IOM segments.
Globally, we plan to open more than 2,100 restaurants this year, with about 500 of these openings in our U.S. and IOM segments, where we continue to see strong returns. We also expect to open more than 1,600 restaurants in our IDL segment this year, including about 1,000 in China, where we recently completed the acquisition of Carlyle’s 28% stake in McDonald’s China. We’re excited to have increased our minority ownership to 48% in our second largest and fastest growing market and believe it will enable us to further benefit from the market’s long-term potential. Overall, we anticipate about 4% unit growth, driven by more than 1,600 net restaurant additions in 2024. And finally, we expect to generate strong cash flow in 2024 with free cash flow conversion in the 90% range.
Going forward, our capital allocation priorities remain unchanged. First, investing in the business to drive growth. This includes both capital expenditures, as well as increased cash investments in technology, digital, and GBS. Second, returning all remaining free cashflow through dividends and share buybacks over time. While the macro environment remains challenging, we believe that our Accelerating the Arches strategy is the right playbook and we continue to maximize our [MC&D] (ph) growth pillars to drive strong results. We have confidence that our competitive strengths and our ability to continue to evolve to stay ahead of the customer positions us to succeed in any economic environment, delivering long-term growth for our system and our shareholders.
Now let me turn it back over to Chris to close.
Chris Kempczinski: For nearly 70 years the McDonald’s story has been one of growth, a first job for millions, the best franchising opportunity in the world, and a familiar beacon of support for the over 40,000 communities we serve. In fact, our U.S. business generated 1.4 million jobs and contributed $108 billion to the U.S. GDP in the last year alone. Even as the world around us continues to change the power of our brand has stood the test of time. That’s because McDonalds’s continues to reinvent itself and stay one step ahead of our customers. While our Accelerating the Arches strategy is working, we will only keep growing when we’re continuing to take smart risks and operating with the long term mind set. Ray Kroc said it best, the only way we can advance is by going forward individually and collectively in the spirit of the pioneer, in the pride of accomplishment.
Even with all that we’ve accomplished since the launch of Accelerating the Arches, I am confident that there is so much more that we can achieve. I look forward to coming together with all three legs of our stool at our upcoming worldwide convention this April to share how we will reimagine our future together. Thank you to our franchisees, suppliers, and employees whose passion and dedication is central to bringing the McDonald’s experience to life for our customers each and every day. With that, we’ll take questions.
Operator: Thank you. [Operator Instructions]
Mike Cieplak: Our first question is from David Palmer with Evercore.
David Palmer: Thanks. Probably just a two-parter. Quickly, do you think that there’s any impact from boycotts to IOM results anywhere, even if they’re slight? And then separately, the multi-year trends this year have been stable for a lot of the year, basically since the second quarter. I’m really thinking the U.S. very strong compared — very strong multi-year trend. So there’s no shame in these remaining stable. I’m just wondering if you think that there is a reason for those trends to reaccelerate or there’s a lesson in that, maybe your best play because, obviously, we’re dealing through some very noisy months here with weather and whatnot over the fourth quarter and here in January. So I’m wondering how you’re viewing that with the goal perhaps being that multi-year trend can reaccelerate in 2024 and your best play to make that happen. Thank you.
Chris Kempczinski: Hi. David. It’s Chris. Thanks for the question. First on your question about the Middle East. Obviously the place that we are seeing the most pronounced impact is in the Middle East, we are seeing some impact in other Muslim countries like Malayasia, Indonesia. And then as far as IOM impact, it depends on the country. So in a country, for example France that has a larger Muslim population, we are seeing some impact in France. It depends very much on where the restaurant is located and if it’s in a Muslim area. But we are seeing some impact there. And then in other countries, like Spain, like in Italy, we’re seeing no impact. So it really depends very much on the country. But, as I said, the most pronounced impact that we’re seeing is in the Middle East and in Muslim countries like Indonesia and Malaysia.
Also, as we said in our prepared remarks, our outlook is, so long as this conflict, this war is going on, we’re not making any plans, we’re not expecting to see any significant improvement in this. It’s a human tragedy what’s going on, and I think that that does weigh on brands like ours. Back to your other question about potentially a reacceleration as we also said in the prior remarks and we also talked about it at Investor Day, we’re expecting 2024 to be normalizing comp sales growth in that kind of 3% to 4% range, which is, where we’ve been more historically. So, we certainly had great performance over whether you look at it on a two-year horizon, a four-year horizon, 30 plus percent on a four-year horizon, call it 14% or so on a two-year horizon.
So, feel great about that, but I think we are moving into 2024 that’s going to look more like what you would have considered a typical year prior to COVID and all the things that have gone on.
Mike Cieplak: Our next question is from John Ivankoe with JPMorgan.
John Ivankoe: Hi, thank you. The question is on France, and France has obviously been a leading market for McDonald’s in a lot of ways for a couple of decades now, and in some cases it has actually been a leading indicator of positive performance in other markets or things that were done in France that were then copied by others quite successfully, implemented by others quite successfully. So it did sound like you had some self-help in France, value, core menu and delivery. I mean, did you find yourself, I guess, kind of catching up from behind in some of those metrics? I wanted to understand a little bit more maybe what you could have done differently in the fourth quarter to improve results? And do you think possibly there could be some leading indicators in France that are happening now within the market, of course, excluding the Middle East sentiment, that maybe we can apply to other markets to ensure those markets don’t dip negative in the near term.
Chris Kempczinski: Sure, thanks for the question. You’re right in pointing out France for us has been historically one of our best markets. We have some of our highest customer satisfaction in that market. We have some of our highest franchising cash flows in that market. We’re not happy with our performance in France right now. And if I were to isolate two areas that we are focused on to improve in France, the first is, we did get offsides on value there. The team has done a very nice job in pivoting and just put in place a new value program there that we’re seeing great early success with that. But certainly, that was a reaction and we don’t want to see that. And then second, we continue to have operations opportunities in France and that’s something that we’ve been having a lot of engagement on with our franchisees.
