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Three schools of thought on the drop in McDonald's (MCD) comparable store sales across the...

  • Thursday, November 8, 2012, 9:29 AM ET
    Three schools of thought on the drop in McDonald's (MCD) comparable store sales across the global: 1) The company is executing poorly and is fiddling while Rome is burning. 2) The restaurant chain is an early bellwhether indicating the global economy is in even worse shape than many forecasts. 3) The squeeze play is on with Burger King and Wendy's hitting the market with a premium menu and updated stores, while Panera Bread and Chipotle are stealing consumers willing to trade up.
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This news story has 10 comments:

  •  
    I vote for number 2
    8 Nov 2012, 09:33 AM Reply Like
  •  
    ...and I presumed people bought the stock for the dividend.
    8 Nov 2012, 09:37 AM Reply Like
  •  
    I'm long MCD but it's either #1 or #2, no way is the consumer trading up when wages are declining 1.6% yoy, real unemployment is running over 10% (and assuming those folks have cash jobs instead of living in our national parks then they aren't buying Panera Bread's food) and the rest of the world is either in or looking into the abyss of a Depression.
    8 Nov 2012, 09:41 AM Reply Like
  •  
    I think it's number 3. The competition isn't sitting on its hands. Burger King and Wendy's are in the same price range as MCD and certainly the success of Panera and Chipotle steal some business. Every body doesn't always eat at the cheapest place. I am long MCD and am in it for the steady dividend, not the rate of growth.
    8 Nov 2012, 10:05 AM Reply Like
  •  
    As am I. Buying on these dips. Hard to call the bottom. I've bought in at 89 and 87.
    8 Nov 2012, 10:08 AM Reply Like
  •  
    Agree, primarily #3 while at the same time MCD is out of ammo at the moment. It will take more than a Christmas time McRib to resume driving the growth that McCafe has offered over the last 5 years. All the competition seems to be focusing on taking a piece of MCD.

    Regarding #2, this is where MCD shines, at least it did 4 years ago.
    9 Nov 2012, 12:43 PM Reply Like
  •  
    I'll vote for #4, where Americans suffer burger fatigue.
    8 Nov 2012, 11:01 AM Reply Like
  •  
    I wonder if people just haven't yet realized how bad the economy is going to get. Have to admit that, despite owning McDonald's stock, I prefer Panera. In part, it's because my local McDonald's makes the all-time worst hamburgers I've ever tasted. But that's a local issue. Have had better ones at other MCD locations. Still, I think of Panera as a different category of eating than MCD. Wendy's would have to get so much better to lure me in, and then only if I'd heard that from people who'd been there. I like Burger King occasionally. The flavor of the burgers is good. I'm probably more middle-class than many who responded to this.
    13 Nov 2012, 04:50 PM Reply Like
  •  
    "I wonder if people just haven't yet realized how bad the economy is going to get."

    I suspect we're in for some serious food price inflation next year and a lot won't see it coming and most will blame QE.
    14 Nov 2012, 08:40 AM Reply Like
  •  
    The USDA has already forecasted a 16% increase in beef prices for 2013 (and just for the record they are the worst forecasting body I've ever seen), it'll be higher than that . . .
    14 Nov 2012, 09:01 AM Reply Like
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