Looks Like McDonald's Isn’t Going Anywhere Anytime Soon
Over the past few years, McDonald’s (MCD) has weathered quite a few storms and many analysts predicted they would be on a slow decline as a company. Much of this is the result of the healthy eating movement (as well as people’s penchant for Pinterest inspired all organic meals) that seems to be growing stronger as the years go on. Additionally, many people have been dissatisfied with the wages McDonald’s pays their employees. However, McDonald’s as a company seems to be able to prosper quite well despite it all.
One way McDonald’s is looking to boost profits is starting this fall, they will offer breakfast all day long at many of their locations after realizing that 40% of their profits happen before 11 A.M. and that many other companies, like Starbucks (SBUX), profit from people having breakfast at all times of day.
This is going to be a strong part of McDonald’s CEO Steve Easterbrook’s plan to continue to turn the company around after they saw a decline in profits in 2014. In fact, McDonald’s executives reported that they expect sales to increase by 2.5% because of this plan to serve breakfast all day. According to McDonald’s this 2.5% could translate to $31,000 more in profit for those who own McDonald’s restaurants.
All of this comes amid an interesting set of newer negative news. For example, a writer from San Francisco accused McDonalds of stealing his ideas for an ad campaign, which shows a lack of creativity and ingenuity on their part. Then, the Cleveland Clinic very publicly stopped serving McDonald’s in their cafeteria. According to Time, they are the seventh hospital to stop serving McDonald’s (and frankly, I’m surprised it’s not more than that!) And, this journalist from The Street wittily pointed out that he believes McDonald’s as a company is “toast.”
Still, despite all of this, Bloomberg recently reported that McDonald’s is experiencing a turnaround and that investors should definitely take note. Their reason for saying this is that McDonald’s stock has done better than the S&P 500 (SPY). Even though they have naysayers, the turnaround actually does seem to be happening. Really, deciding whether or not to invest in McDonald’s at this point comes down to who is willing to see if a really strong McDonald’s turnaround will take place and who isn’t ready to take the risk to find out.
I personally think that McDonald’s isn’t going anywhere. Their company is so widespread, so prolific in all parts of the globe, that a severe downward spiral seems incredibly unlikely. However, given that McDonald’s frequently receives bad press for their unhealthy menu and their low worker wages, they are definitely a risky company to consider as their stock prices can fluctuate depending on the media.
It is encouraging though that they are trying to find new ways to turn a profit. Many people I know love McDonald’s for breakfast, and I can see many high school aged and college aged students enjoying breakfast when they wake up well after noon.
Disclosure: None.