McDonald's recovery missing key ingredient
Is it time for the all-American restaurant to make a push in China?
My friend insisted that McDonald's was on its way up, pointing to the relatively gourmet Angus Third Pounders and Snack Wraps. Evidently, he was right.
Analysts pointed to the restaurant's increasingly popular limited-time items like the Cheddar Bacon Onion Sandwich and its improved breakfast item sales as reasons for the sales bump. Another possible explanation is that there's a McDonald's right outside the Delancey St. stop on the F train, and I cannot stop walking into it and buying entire cows worth of Quarter Pounders.
Understandably, this has investors and analysts optimistic. Janney analyst Mark Kalinowski upgraded McDonald's to a "buy" from "neutral," claiming that the company's easier comparisons over 2013 will be healthy for the stock. The share price has been climbing back from its yearly low in November, rising to $89.41 from $84.05 after plunging from a recent mini-high in October.
There is, however, reason for caution. The greatest sales increases this month were in the U.S. and Europe, the two biggest markets for the restaurant. Sales in Asian markets, on the other hand, previously areas of great growth, rose only 0.6%.
It is here that McDonald's can take a page out of Yum Brands' (YUM) book. Yum's KFC restaurants take on an entirely new menu in Asia, offering noodles and congee made from local ingredients, while McDonald's largely remains the same, save for offering chicken thighs rather than chicken breasts in their sandwiches. There are a few regional adaptations (like the delightfully named Shogun Burger), but overall there's not a massive difference at McDonald's between Chongqing and Chicago.
It's no coincidence, then, that KFC consistently beats McDonald's in China; KFC has better adapted its menu to cater to the market. At the moment, McDonald's is at the mercy of its sales numbers in the U.S. and Europe. The restaurant has begun to adapt its menu to increasingly subtle American sensibilities, adding things like mushrooms, better cheeses, and beef that's not made from "pink slime." Why not do the same overseas and fight KFC for supremacy?
I have never understood that at McDonald's, or indeed any other fast-food franchise, why people who are trying to save money, or even people who aren't, don't just buy items off the dollar menu. These items taste the same as the more expensive items on the menu, and are much cheaper. If you are really hungry, just buy more dollar items and you will still come out money ahead. Maybe not good for McDonald's bottom line, but good for strapped consumers.
If you have Culver's in your area, you should get excellent service there (there are no Chick Fil A's in Minnesota).
I may not know what I want, or what is new, that I might like to try.
I don't know is holding up (?) how many others that do know what they want.
Because the only board onsite is the order board, that means every one behind me has to wait
until I make up my mind and order.
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