There seems to be little that can stand in McDonald's way.
Wall Street is expecting further growth ahead of the company's latest quarterly results on February 5th. This comes as fast-food stocks were hurt last year by tight wallets, rising costs and concerns over the impact of weight-loss drugs.
But the Big Mac maker continues to do well as consumers continue to seek out value-for-money meals. Adjusted earnings per share are expected to rise 7% to $2.82, and revenue is expected to rise 9% to $6.5 billion. The GLP-1 storm appears to be passing.
In December, McDonald's CEO Chris Kempczinski told Yahoo Finance, “Currently, we don't see any impact from GLP-1, but we don't know what kind of impact it will have in the future.'' No one knows,” he said.
Analysts are optimistic that McDonald's can push through, well, anything.
Wedbush analyst Nick Setian said in a note to clients, “It's hard to imagine McDonald's not winning in any consumer environment,'' including menu pricing, innovation, and the effectiveness of its loyalty program. As a result, same-store sales are expected to grow sustainably in the short term. Marketing, business execution and efficiency.
Jefferies' Andy Barish named the stock a top pick for 2024, calling it “a great stock for a defensive and offensive play in restaurants with resilience in uncertain or weak macro environments.” [environment]” Barish expects the chain to invest more in digital products, delivery products, drive-thru products and poultry products.
McDonald's stock has risen 7% over the past year, lagging the S&P 500's 20% rise.
As employees gradually return to the office, the chain appears to be seeing a return of breakfast customers. According to Placer.ai, 16.7% of store visits in 2023 took place between 7 a.m. and 10 a.m. ET, up from 15.9% in 2022, while 18% of store visits took place during those hours. This is still lower than in 2019.
Citi analyst John Tower said he expected breakfast challenges across the industry, but said McDonald's digital efforts and large scale were “core advantages.”
“McDonald's has done a tremendous job, especially over the last three years, of leading and strengthening this mobile ordering and loyalty program in the U.S.,” Tower said on Yahoo Finance Live.
Higher usage of the app will improve data collection and give McDonald's more insight into its customers and their behavior, Towers added.
Systemwide digital sales (including app, distribution and kiosk sales) in the third quarter totaled $9 billion across six major markets, accounting for 40% of total sales. This was a significant increase from the second quarter, when digital sales were $8 billion.
Additionally, McDonald's aims to expand the number of stores from 41,000 to 50,000 by 2027, so another growth spurt could be coming. This “will allow McDonald's to better capture the increased demand we're seeing around the world,” Barish said.
Despite “continued concerns about profitability for a wide range of quick-service restaurant franchisees,” Barish said he expects the problem to ease. Future rate cuts could also help investors “better assess” growth plans, he said.
Additionally, they may soon get another franchise, CosMc.
The drive-thru-only concept, approximately 2,800 square feet compared to typical 4,000 to 4,500 square foot restaurants, aims to solve the 3 p.m. slump with customizable drinks along with sweet and savory treats. is.
McDonald's opened its first store in Bolingbrook, Illinois, on Dec. 7 and plans to open nine more in Texas this year.
So far, the pilot locations seem to be paying off.
Based on preliminary data from Placer.ai, CosMc said, “In December 2023, the typical McDonald's store traffic was more than double what the chain saw, and more than tripled the number of store visits per square foot. ” said Placer.ai Head of Analytics. Research written by RJ Hottovy.
He suspects this number “could have been much higher” if the concept had additional capacity to “meet overwhelming demand.”
Viewers also tend to skew younger, with the largest audience being 18-34, another win for the Golden Arches.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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