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MCD stock has suffered as states and countries are on lockdown. In US people are not meeting friends and colleagues or going out with family for breakfast, drinks, lunch, or dinner. Restaurants and food outlets are operating in the take-out-only mode, and many are closed. Besides lower demand, the supply chain across the world is suffering, which will also weigh on sales.
For Q3 2020, The company's revenue was recorded at $5.4 billion, down 2% compared to the same period in previous year (down 2% in constant currencies). The Company saw an fall in Global comparable sales by 2.2% due to the Covid-19 pandemic. Comparable sales in The International Operated segment saw fall of 1.4%, U.S. segment rose by 4.6%, and the International Developmental Licensed segment fell by 10.1%. The diluted earnings were recorded at $2.34, compared to $2.11 in the same period of previous year. Most McDonald’s restaurants worldwide remain open to serve customers in the beginning of Q3.
McDonald’s is revamping its stores to create “Experience Of The Future” (EOTF) restaurants which will have self-serve kiosks and table service. The company’s mobile ordering and payment system continues to expand (in 20,000 restaurants currently) and McDonald’s is also effectively using the data captured via this platform for personalized marketing and customizations. MCD has also introduced delivery in 11,500 restaurants, through its partnership with UberEats. CFO Kevin Ozan has stated that the delivery check size is generally one-and-a-half to two times the in-store check. In a number of its top markets, delivery has increased to form roughly 10% of the total sales. Consequently, an effective use of technology is another key growth factor for McDonald’s in 2018, as it can drive the average check higher. The company expects EOTF project to be substantially complete by 2020.
Below are key drivers of McDonald's value that present opportunities for upside or downside to the current Trefis price estimate:
Average Revenue Per U.S. Restaurant: Historically, the Average Revenue per restaurant (both company-owned and franchised) has increased and as the company focuses on a combination of value and gourmet products, revenue per restaurant is likely to increase with higher ticket price. Further increasing guest count with higher comparable sales is likely to drive this metric further over our forecast period.
Number of franchise restaurants in high-growth markets: McDonald's is working towards a goal of being a 95% franchised entity and growth in the number of franchised restaurants is improving profitability. Further, as the company expands an adds more restaurants, systemwide sales are likely to grow.
McDonald's owns and franchises its restaurants all over the world. Of the 39,020 restaurants in 120 countries at the end of June 30, 2020, 36,371 were operated by franchisees and 2,649 were operated by the company
McDonald’s essentially offers a uniform menu, though with minor variations to suit the local taste. A typical McDonald’s menu includes burgers, sandwiches, salads, snacks, breakfast sandwiches (McMuffins), beverages (soft drinks, coffee, milk shakes, juices), and desserts (ice cream, pies, smoothies).
McDonald's competes primarily with Wendy's and Burger King in the hamburger fast food category. It competes with Starbucks through McCafe.
McDonald's classifies its operations into the following three segments:
U.S. International Operated Markets International Developmental Licensed Markets and Corporate
We believe, the U.S. and International Operated Markets are the key sources of value for the company as it captures the growth in China and provides value for its customers in the U.S.
McCafe represents McDonald's foray into the high-margin caffeinated beverages market dominated by premium coffee chain Starbucks. McDonald's has been able to keep the prices competitive and margins healthy due to its excellent store network, its marketing muscle, and a highly efficient supply chain. McCafe's menu has been extended to more than coffee and now includes fruit smoothies, mocha, and chocolate shakes.
The breakfast market is proving to be a profitable segment especially in the U.S. McDonald's is the dominant player in the breakfast segment with a market share of over 30%. McDonald's ensures new items are added to the breakfast menu regularly. However, it now faces serious competition as a number of rivals such as Dunkin' Brands, Restaurant Brands International, Taco Bell, and Starbucks have stepped up their game in the breakfast segment. Starbucks is in the process of reinvigorating its breakfast menu with the help of baked goodies launched under the La Boulange brand. Restaurant Brands International houses two well-renowned brands: Burger King and Tim Hortons, both of which are already a strong presence in the breakfast market. Dunkin' Donuts has also revamped its breakfast menu to cater to the needs of its customers.
McDonald's is in the process of converting its stores into "Experience Of The Future" restaurants, providing technological convenience to its customers. The company's focus on balancing its innovative gourmet offerings to attract millennials with its value focus to retain existing customers is likely to drive growth in the future.
After a 10% rise this year, at the current price near $215 per share, we believe McDonald's stock (NYSE: MCD) has a moderate upside in the near term. MCD stock has increased from $197 to $218 since the start of the year compared to the S&P 500 which also increased by 10% in 2020. ...More
McDonald's (NYSE: MCD) has seen its stock rise by 55% in the last 5 months and by 9% since the beginning of this year, with its market cap standing at roughly at $160 billion. The stock now trades at close to 36x projected 2020 consensus earnings, despite the fact that the coronavirus pandemic will result in the company seeing a fall in revenues and earnings. ...More
McDonald’s stock (NYSE: MCD) has grown only 19% since the end of 2019, but Starbucks' stock (NASDAQ:SBUX) has grown by 36%. This, despite the fact that McDonald's has better profit margins and geographical reach than Starbucks. We believe that the stock price movement does not make sense and McDonald's is a strong investment currently. ...More
Luby's stock (NYSE: LUB) was at less than a dollar since 2nd half of March 2020 and has recovered slightly to around $1.85 after the company announced it will pursue the sale of its operating divisions and assets. The company will consider a variety of transactions, including selling off its operating divisions and real estate or selling the company in its entirety. ...More
McDonald’s stock (NYSE: MCD) has grown 20% in the last couple of years (since Jan 2018), but Restaurant Brands' Stock (NYSE: QSR) has grown by only 10%. ...More
McDonald's (NYSE:MCD) stock has gained 40% in the last 3 years or so, since the end of 2016, and was up even more prior to the pandemic-driven market fall. ...More
McDonald’s (NYSE: MCD) stock has declined by close to 12.6% since early February after the WHO declared the Coronavirus a global health emergency, while Dunkin’ Brands (NASDAQ:DNKN) stock has fared worse and lost 21.7% of its value. ...More
McDonald’s (NYSE: MCD) stock tanked from nearly $230 in early February to a multi-year low of $124 a month ago as the spread of the novel Coronavirus rattled the stock markets and the broader economy. ...More
As per Trefis analysis, it is likely that McDonald’s (NYSE: MCD) stock could bounce back strongly as the crisis winds down. The company's stock has taken a big hit, falling by about 14% from March 8-12, 2020, as the broader S&P 500 fell by over 16.5%. The stock was down by a total of over 20% since early February through Thursday. ...More
McDonald’s (NYSE: MCD) is slated to release its Q4 and full-year 2019 results on January 29, 2020. We believe that McDonald's Revenues and earnings will beat consensus. We expect McDonald's to report revenues of $21.1 billion (vs. consensus estimate of $21 billion), which would be 0.5% higher than the previous year. Earnings are likely to be around $7.99 (vs. ...More
Chipotle Mexican Grill (NYSE: CMG), is a quick service restaurant in the US that features a Mexican menu of burritos, burrito bowls (a burrito without the tortilla), tacos, and salads. The company's focus is to give a fine dining experience to the world of quick-service restaurants. ...More
Yes, as per Trefis estimations, McDonald’s (NYSE: MCD) top line is expected to have a small increase of 0.5% and post revenue at around $21.1 billion for 2019. The company generates its revenue primarily from its US Market which is projected to account for 37% of total revenues in 2019, while the International Lead Markets are expected to contribute 36% to the top line. ...More
McDonald’s (NYSE: MCD), has its expenses largely clubbed under its cost of sales and SG&A expenses, which together accounted for about 82.4% of the company’s total expenses in 2018. However, this is a reduction from 86.5% of total expenses that these two cost heads accounted for in 2015. ...More
McDonald’s (NYSE: MCD), whose stock currently trades at around $212, generates its revenue primarily from its US Market which is projected to account for 37% of total revenues in 2019, while the International Lead Markets are expected to contribute 36% to the top line. ...More
Restaurant Brands International (NYSE: QSR) is one of the world’s largest quick service restaurant (“QSR”) companies, with more than $30 billion in system-wide sales and over 25,000 restaurants (approximately 100% franchised) in more than 100 countries and U.S. territories as of December 31, 2018. ...More
McDonald’s (NYSE: MCD) is an American chain of quick service restaurants. It operates and franchises McDonald’s restaurants, which serve a locally-relevant menu of quality food and beverages in more than 100 countries. The restaurants offer a substantially uniform menu, although there are geographic variations to suit local consumer preferences and tastes. The restaurants in the U. ...More
McDonald’s (NYSE: MCD) stock price has increased more than 2x from $97/share in August 2015 to $211/share in August 2019. The increase was primarily driven by continuous re-franchising and a sharp rise in margins, Revenue growth and strong margins are expected in 2019. ...More
Domino's Pizza Inc (NYSE:DPZ) has seen very high growth since 2014, which took it to the top of global pizza chains in 2017 with respect to retail sales. Its operating margin has also continuously increased with 2018 seeing the highest jump in the last six years to 37.9%, ahead of Pizza Hut at 35. ...More
McDonald’s (NYSE: MCD), the American fast food company, announced its Q1 2019 results on April 30, 2019, followed by a conference call with analysts. The company beat consensus for revenue which was recorded at $5 billion, down by 3.6% y-o-y. ...More
McDonald’s (NYSE: MCD), the American fast food company, is set to announce its Q1 2019 results on April 30, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $4.9 billion in Q1 2019, which would be a decrease of 4.1% on a year-on-year basis. The decrease is mainly expected with the continuous re-franchising of the restaurants. ...More