McDonald’s (MCD) has one final shot this year to supersize its stock price.
And that Hail Mary toss will happen in Chicago on Wednesday at a closely watched investor day.
“We think the Sep 23 Investor Day could prove a crucial clearing event in which management articulates a credible path to reaccelerating same-store sales in the 4Q/2027, protecting & growing operating margins (w/ potential SG&A leverage starting next year), and still accelerating unit growth despite the tough macro,” Jefferies analyst Andy Barish wrote. “For the stock to rebound, management will have to convince investors the recent same-store sales slowdown is fixable (soon) and restore confidence in the long-term growth algo.”
It has been a dreadful year for the Golden Arches — one punctuated by an 18% drop in the stock price.
Comparable sales for a resurgent Restaurant Brands International-owned (QSR) Burger King US rose 8.5% year over year, beating analyst expectations, per Yahoo Finance AlphaSpace data. The result trounced McDonald’s US result, which reported a disappointing 0.8% comparable sales gain.
McDonald’s entered the fall with a black eye, given the barrage of key initiatives it recently launched and plans to launch.
First, McDonald’s debuted its new McValue menu by offering 10 items under $3.
It then launched six new drinks on May 6, with refreshers like Strawberry Watermelon and crafted sodas like Sprite Berry Blast. All the drinks are caffeinated and aimed at Gen Z consumers who have been going to the nearest Dutch Bros (BROS) or convenience store for a Celsius (CELH).
A nationwide Aug. 17 rollout of its Red Bull Dragonberry Energizer ensued.
But the revamped McValue platform, discounted breakfast offers, and broader push into specialty beverages all failed to generate the incremental traffic McDonald’s was banking on in the second quarter.
Investors are hoping to hear a different tune tomorrow.
“While lower-income consumer trends and highly promotional QSR environment don’t provide much support, we view strategic missteps as largely responsible for the recent slowdown in same-store sales/traffic, much or all of which can be addressed in the 4Q and ’27 to reaccelerate trends,” Barish wrote.
“We expect a relatively quick adjustment to the marketing and menu innovation calendars that drove execution issues in the summer as management and franchisees return to a workable balance (some digital promos returned Aug 10, Spicy Chicken McNuggets limited-time offer came back Sept. 1, Spongebob x One Piece promo starts 9/15),” Barish added. “Work around franchisee pricing and participation in promos and value offerings could take longer, we expect an update on convos w/ franchisees next week. Finally, growing awareness of the new premium bevs (Red Bull launched Aug 17), Rewards, digital/delivery, and EDAP provides at least a steady floor.”
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