McDonald’s Corporation (NYSE:MCD) aims to drive sales higher through new product additions and by changing consumer perception of its products. The comparable sales growth has been weak with both April and May at 3.3% compared to 7.3% for Q1 2012. McDonald’s stock price has declined more than 10% in 2012.
The new products are expected to emphasize freshness and low calorie content. For example, blueberry banana nut oatmeal, which was launched in May of this year, contains only 290 calories and uses regionally sourced ingredients. The company plans to introduce oatmeal in apple cinnamon and other flavors. Another recently launched product, the fruit and yogurt parfait, contains only 160 calories. The new product offerings should help attract more health conscious consumers. [1]
McDonald’s also recently added mango pineapple smoothies and peppermint mocha to its U.S. menu and added iced latte to its menu in July. The company is also focusing more on chicken based products. [2]
Most of the new product offerings will only complement the core menu as the company does not want to alienate its core customer base. The new additions are intended to attract new customers that currently do not eat at McDonald’s. This is expected to minimize the amount of cannibalization that may occur from the launch of new products.
We have a $98 price estimate for McDonald’s, which is more than 10% higher than the market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- McDonald’s pushing health with new oatmeal, July 8, 2012, lehighvalleylive.com [↩]
- McDonald’s New CEO Focuses On Chicken Amid Shaky Economy, July 3, 2012, bloomberg.com [↩]
