What's wrong with McDonald's?
After a stellar 2011, America's favorite fast food chain has struggled throughout 2012. What will 2013 bring?
Following a great 2011, McDonald's (MCD) has been one of the Dow's worst performers of 2012. Year-to-date, shares of McDonald's are down more than 9.7%.
The shares are off their recent lows, but remain well below the 52-week high of $102.22. A number of factors seem to be weighing on the fast food giant.
Most recently, on Wednesday, McDonald's was forced to respond to a report by China Central that chicken it sold in its Chinese stores may have been fed indiscriminate amounts of antibiotics and growth hormone.
On Monday, Reuters reported that McDonald's leadership was urging its franchisees to keep their stores open on Christmas Day. This is a break from the company's traditional policy of closing on major holidays.
In a company memo Reuters obtained, management noted that McDonald's stores that remained open on Christmas averaged sales of $5,500. Given that most restaurants are closed for the holiday, impressive Christmas sales seem intuitive given the lack of competition.
Is it a sign of desperation, or just a part of a greater business trend? Wal-Mart (WMT) drew the ire of some employees in November when it moved up the time it would open to 8 p.m. Thanksgiving night.
Analysts at Bank of America don't think openings could add much to the company's top lines, noting, "We do not view incremental openings on Thanksgiving this year as a primary factor behind a surprisingly good 2.5% U.S. same store sales increase for the month of November. Likewise, we are not anticipating that more Christmas restaurant openings this year will have much impact on December results."
The biggest issue with McDonald's is likely the company's exposure to Europe, which is significant. As Europe has struggled, McDonald's performance in the region has been weak. Yet, should the European economy begin to recover next year, that could create a tailwind helping to support shares of McDonald's in 2013.
Shares of McDonald's traded about flat on Thursday, at $89.72.
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I just wish the management here in Australia would get out and look at the stores. The last meal we had at a Maccas put me off for life. Staff and food were setting new standards of how low they could get!!
It kills me to hear how people say bad thingts about McDonald's; but, you can find these same people in the drive-thru lane with 15 cars ahead of them. It's like alot of people admit they don't like Barry Manilow; but, their ipad is loaded with his songs.
Come out of the closet people...
Eating at McDonald's is always a gamble. Sometime their burgers and fries are right on, and other times they're stale and/or poorly cooked. Now that my odds of reasonably good food seem to have fallen below 1 out of 2, I don't feel like "gambling" anymore.
It's like every other food or resturant. You can't keep doing the same thing over and over and expect different results.
There product has become expensive and stale. Hard combination to sell.
"Most recently, on Wednesday, McDonald's was forced to respond to a report by China Central that chicken it sold in its Chinese stores may have been fed indiscriminate amounts of antibiotics and growth hormone."
Let me get this straight--the Chinese are complaining about possibly tainted products? The same people who brought us contaminated drywall, pet food with melatonin and toys full of lead? REALLY..!
Gotta love the irony.
I appreciate McDonalds!
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