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  • McDonald's Just Ain't What It Used To Be 0 comments
    Apr 24, 2014 4:46 PM | about stocks: MCD

    McDonald's Q1 earnings released on Tuesday weren't all that bad, but they weren't good either. Not only did they miss revenues and earnings estimates, but the global comp sales increased of 0.5%, was mainly due to a higher average check amount. Guest traffic is actually on the downturn right now, and it's something that they should be very afraid of.

    In the U.S. specifically, comp sales were down 1.7%. And even though CEO Don Thompson was able to get a shot in at Taco Bell during the earnings call, he can't deny the precarious perch McDonald's has right now atop the fast-food breakfast market. And that's some serious business. Breakfast accounts for 25% of sales in the U.S. Now that Taco Bell with its (really weird) waffle taco and White Castle with its Belgian waffle sandwich have thrown their hats in the ring.

    Their first response to it all was to offer free coffee for two weeks--which I'm sure the franchisees were absolutely ecstatic about. But no, that's not going to solve their problem. Another new thing they introduced just today was a new (hip?) makeover for Ronald McDonald. And I sincerely hope that isn't the best they've got, because nothing is going to make that dude less creepy. Plan to see a big shakeup at the Golden Arches to try to stay competitive in the U.S.

    Another market McDonald's needs to worry about is Russia, one of the countries where they actually had a positive performance over the quarter. According to a poll conducted by SuperJob's Research Center, 62% of respondents in Russia support pushing the burger chain out, possibly causing Thompson to second guess whether or not they should announced pulling out of Crimea.

    Having been through enough blows to the head already (Morgan Spurlock's Super Size Me and the low wage battle being just a couple), don't look to see the burger chain go down without a fight. They've proven to be surprisingly resilient in the past, but they'll need more than a few more aces up their sleeve to even dream of getting back to the dominance they once had.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: MCD
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