Shares in McDonald’s stall as challenges mount
Like many established businesses, fast food giant McDonald’s is being forced to adapt rapidly to the changes wrought by a global pandemic – and its ability to do so successfully will be a key focus when it announces fourth quarter earnings on 28 January.
Having enjoyed a strong recovery in the six months following the market’s March 2020 lows the McDonald’s share price has stalled since October. Comparable sales worldwide dipped 2.2% in the third quarter.
The appeal of McDonald’s has been its speed and familiarity, with diners enjoying it as a convenient option to grab a quick bite in its restaurants or as a food-on-the-go option.
With many of its sites closed to customers for long periods due to Covid restrictions, the company has been forced to rely on drive-through and delivery sales.
Many people will still crave their regular McDonald’s enough to order for home consumption, but it is competing with a larger marketplace and is no longer benefiting to the same extent from the competitive advantage derived from an unrivalled global footprint.
Another sense in which the business is being forced out of its comfort zone is on the product side where the company is adapting to changing customer tastes.
It faces two key tests on this front in 2021 with the launch of its McPlant plant-based meat alternative range and more immediately a new chicken sandwich as it looks to win out in the US fast food sector’s so-called ‘chicken war’, as Americans’ appetite for poultry-based burgers grows. [TC]