Wall Street Isn’t Biting on McDonald’s NEXT Menu

McDonald’s has 99 problems, including GLP-1s.

Shares of the Golden Arches have tumbled more than 20% this year as inflation decreases consumers’ appetites for Big Macs and McFlurrys, and weight-loss drugs wreck their appetite for them and everything else. On Wednesday, the company unveiled a turnaround plan to investors dubbed McDonald’s > NEXT, which featured new restaurant designs and a whole lot of chicken. Wall Street was not lovin’ it: Shares dropped nearly 5%.

Fry So Serious?

Why did the consumer cross the road? To get to the supermarket across the street. Yes, consider inflation and air fryers the great french fry equalizers. Same-store foot traffic to McDonald’s locations fell 4.6% year-over-year in August and 6% in July, according to Placer.ai, as consumers increasingly downshift to cheaper grocery stores, which have been hit less hard by inflation. CEO and the internet’s least favorite burger (or in his words “product”) taste tester Chris Kempczinski told CNBC Wednesday the company expects inflation and mediocre traffic to continue for the foreseeable future.

Still, as part of the NEXT turnaround plan, McDonald’s is hoping consumers will be crossing back over the road for its new chicken items, among other upgrades:

• The fast-food giant said it will soon start piloting new hand-breaded and grilled chicken options in an effort to better compete with poultry players like Chick-fil-A and Popeyes (McD’s franchisees have been warning about the Chicken Wars for years now). The chain said it holds about 20% of the global $130 billion chicken market, and wants to increase its share by 1.5 percentage points by 2030.
• The company said it plans to deploy $8.5 billion overall through 2036 to help franchises improve operational efficiency. The improvements will lead to $100,000 in new annual cash flow for the average US location, the company says.

Return of the King: The fast-food giant also faces another if more familiar threat: Burger King. The rival chain is resurgent amid a new marketing push and ingredient refresh. While McDonald’s suffered through sluggish 0.8% year-over-year same-store US sales growth in the second quarter, the home of the Whopper scored a whopping 8.5% comparable leap.