US Markets
Tuesday, December 5th, 2023 2:51 pm EDT
Key Points
- Accelerated Expansion and New Brand: McDonald’s is set to reveal details about its accelerated expansion plans, including a new spinoff brand called CosMc’s, during its upcoming investor day. This move is part of the company’s strategy to grow sales, improve core menu items, and leverage digital initiatives, as outlined in its previous investor presentation three years ago.
- Corporate Restructuring and U.S. Footprint Plans: McDonald’s underwent corporate restructuring earlier in the year, involving a refocusing of priorities and accelerated restaurant expansion. While CEO Chris Kempczinski highlighted the need to streamline the organization and avoid silos, details about the broader impact of this restructuring on decision-making and the company’s direction have been limited. Additionally, the company plans to adjust its U.S. footprint, recognizing that its current distribution does not align with where consumers currently live, especially considering demographic shifts to the South and Southeast. McDonald’s aims to experiment with new restaurant formats and features, such as automated locations and the launch of CosMc’s, inspired by an old McDonaldland character.
- International Expansion and Technology Initiatives: McDonald’s is focusing on international growth, intending to build more locations in its international markets, including Canada, Germany, Australia, and France. Despite describing growth in these markets as “pretty anemic,” the company recently bought back a minority stake in its China business for $1.8 billion, making China its second-largest market. Alongside this, technology plays a crucial role, with McDonald’s increasing its digital business through initiatives like self-order kiosks and its mobile app. The introduction of a loyalty program, not launched nationwide during the last investor day, has since been implemented, contributing to a reported 15% increase in visits from members. Investors are eager to learn more about McDonald’s insights into customer behavior, implementation plans, and potential digital innovations.
McDonald’s is set to unveil key details about its accelerated expansion plans, a new spinoff brand named CosMc’s, and its digital strategy during its upcoming investor day. Three years ago, the company introduced a growth strategy centered around enhancing core menu items, launching a loyalty program, and focusing on chicken and coffee. Despite Wall Street analysts not anticipating major shifts, there are expectations for a near-term forecast on sales growth and new unit development during the presentation.
However, there is speculation that McDonald’s predictions may be conservative due to concerns about the economy, with consumers remaining cautious despite a cooling inflation rate. Although McDonald’s stock has risen by about 8% this year, it lags behind the S&P 500’s 19% gains. Investors are concerned about potential sales weakening and external factors such as weight loss drugs impacting the company’s performance.
During the investor day, McDonald’s is likely to address several key points:
- Corporate Restructuring: McDonald’s announced a refocus on priorities and accelerated restaurant expansion earlier this year, leading to a corporate reorganization and layoffs. CEO Chris Kempczinski emphasized the need for streamlining the organization, but details about the impact of the restructuring on decision-making and the broader business have been relatively scarce.
- U.S. Footprint Plans: Before the COVID-19 pandemic, McDonald’s priorities for U.S. stores included remodels and upgrades, such as self-order kiosks. The shift in consumer behavior during lockdowns prompted changes, including the phasing out of self-serve soda stations. McDonald’s aims to accelerate restaurant development in the U.S., recognizing that its current footprint does not align with current population distribution, particularly the shift to the South and Southeast. The company plans to experiment with new restaurant formats, features, and the launch of CosMc’s, a small-format spinoff brand.
- International Expansion: McDonald’s plans to accelerate growth in international markets, including Canada, Germany, Australia, and France. Growth in these markets has been described as “pretty anemic,” leading to the company’s recent acquisition of a minority stake in its China business for $1.8 billion. China has become McDonald’s second-largest market by the number of locations, and investors are keen to understand the rationale behind the deal and the company’s long-term plans for the Chinese market.
- Technology Initiatives: McDonald’s, operating roughly 5% of its U.S. restaurants, has limited insight into customer preferences. However, its growing digital business, including self-order kiosks and the mobile app, provides access to franchisees’ customer bases. The loyalty program, not launched nationwide at the last investor day, has since been implemented and reportedly drives a 15% increase in visits from members. Investors are eager to learn more about McDonald’s insights into customer behavior, implementation plans, and potential digital innovations.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/05/mcdonalds-investor-day-what-to-expect.html
