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McDonald's (MCD) Sets New Growth Targets to Boost Its Business
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McDonald's Corporation (MCD - Free Report) has laid down its new growth targets to move further on its Accelerating the Arches strategy.
The company shares optimistic views on the set growth trajectory as it aims to persistently strengthen its brand image, expand its global footprint and build upon the digital ecosystem. These aspects offer unparalleled competitive advantages to McDonald's, thus positioning it strong in the uncertain economy.
Elaboration of the Growth Strategies
McDonald’s’ Accelerating the Arches strategy integrates the core growth pillars of the company, which include maximizing its marketing, commit to the core and double down on the 4Ds, delivery, digital, drive thru and development (included in early 2023).
Under its commit to the core pillar, the company aims to deploy the Best Burger initiative in all its markets by 2026. Furthermore, by 2025, the company expects to offer McCrispy in nearly all markets while expanding the menu items to wraps and tenders. This goal is set on the back of the growing demand share for its chicken category.
Under the double down on the 4Ds pillar, in the Digital category, McDonald’s plans on increasing its active loyalty user base from 150 million to 250 million 90-day active users accompanied by delivering about $45 billion in annual systemwide sales to loyalty members by 2027. Also, by 2025, the company expects to expand its United States pilot of Ready On Arrival in its top six markets.
In the Delivery category, the company wishes to leverage the launch of the mobile app in its top five markets, expecting to witness 30% of delivery orders in its mobile app by 2027. In the Development category, the company plans on increasing its restaurant opening space with the expectation of opening 50,000 restaurants by the end of 2027.
Focusing on advanced tech-driven solutions, on Dec 6, 2023, McDonald’s entered into a strategic partnership with Google Cloud to apply the latest cloud technology and generative AI solutions to all its global restaurants. This move will help the company gain traction in automation innovation, along with effectively detecting issues and facilitating solutions to reduce business disruptions. Moreover, from the beginning of 2024, the company will start deploying the new, universal software on which its every customer and restaurant digital platforms will run.
Market Presence Driving Growth
McDonald’s offerings have reached the billion-dollar brand status through sustained product innovation and geographic expansion. The brand recognition has helped the company gain positive results in its Arches campaign strategies, especially Accelerating of Arches, initiated in its top markets across the globe, thus driving growth.
The successful execution of the Accelerating the Arches strategy is driving increased customer demand and market share gains across major markets. The company's performance reflects the passion and dedication of the entire McDonald's system, with global comparable sales reaching 8.8% and consistent segment results, which indicate the brand's strength.
Image Source: Zacks Investment Research
Shares of this fast-food chain have gained 5% in the past year, outperforming the Zacks Retail - Restaurants industry’s 1.5% growth.
Given the emphasis on digital initiatives, campaigns and loyalty programs, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.
Financial Outlook
McDonald’s announced its preliminary 2024 guidance, wherein it expects the net restaurant unit expansion to be nearly 2% of systemwide sales growth (in constant currency). Operating margin is expected to be within the mid-to-high 40% range while net new restaurant unit growth is expected to be more than 4%.
Zacks Rank & Key Picks
McDonald’s currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has surged 59.6% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests an increase of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has rallied 9.5% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and 26.2% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 137.9%, on average. The stock has gained 43.6% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales suggests an improvement of 0.9% but the EPS indicates a decline of 2.8% from the year-ago period’s levels.
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McDonald's (MCD) Sets New Growth Targets to Boost Its Business
McDonald's Corporation (MCD - Free Report) has laid down its new growth targets to move further on its Accelerating the Arches strategy.
The company shares optimistic views on the set growth trajectory as it aims to persistently strengthen its brand image, expand its global footprint and build upon the digital ecosystem. These aspects offer unparalleled competitive advantages to McDonald's, thus positioning it strong in the uncertain economy.
Elaboration of the Growth Strategies
McDonald’s’ Accelerating the Arches strategy integrates the core growth pillars of the company, which include maximizing its marketing, commit to the core and double down on the 4Ds, delivery, digital, drive thru and development (included in early 2023).
Under its commit to the core pillar, the company aims to deploy the Best Burger initiative in all its markets by 2026. Furthermore, by 2025, the company expects to offer McCrispy in nearly all markets while expanding the menu items to wraps and tenders. This goal is set on the back of the growing demand share for its chicken category.
Under the double down on the 4Ds pillar, in the Digital category, McDonald’s plans on increasing its active loyalty user base from 150 million to 250 million 90-day active users accompanied by delivering about $45 billion in annual systemwide sales to loyalty members by 2027. Also, by 2025, the company expects to expand its United States pilot of Ready On Arrival in its top six markets.
In the Delivery category, the company wishes to leverage the launch of the mobile app in its top five markets, expecting to witness 30% of delivery orders in its mobile app by 2027. In the Development category, the company plans on increasing its restaurant opening space with the expectation of opening 50,000 restaurants by the end of 2027.
Focusing on advanced tech-driven solutions, on Dec 6, 2023, McDonald’s entered into a strategic partnership with Google Cloud to apply the latest cloud technology and generative AI solutions to all its global restaurants. This move will help the company gain traction in automation innovation, along with effectively detecting issues and facilitating solutions to reduce business disruptions. Moreover, from the beginning of 2024, the company will start deploying the new, universal software on which its every customer and restaurant digital platforms will run.
Market Presence Driving Growth
McDonald’s offerings have reached the billion-dollar brand status through sustained product innovation and geographic expansion. The brand recognition has helped the company gain positive results in its Arches campaign strategies, especially Accelerating of Arches, initiated in its top markets across the globe, thus driving growth.
The successful execution of the Accelerating the Arches strategy is driving increased customer demand and market share gains across major markets. The company's performance reflects the passion and dedication of the entire McDonald's system, with global comparable sales reaching 8.8% and consistent segment results, which indicate the brand's strength.
Image Source: Zacks Investment Research
Shares of this fast-food chain have gained 5% in the past year, outperforming the Zacks Retail - Restaurants industry’s 1.5% growth.
Given the emphasis on digital initiatives, campaigns and loyalty programs, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.
Financial Outlook
McDonald’s announced its preliminary 2024 guidance, wherein it expects the net restaurant unit expansion to be nearly 2% of systemwide sales growth (in constant currency). Operating margin is expected to be within the mid-to-high 40% range while net new restaurant unit growth is expected to be more than 4%.
Zacks Rank & Key Picks
McDonald’s currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has surged 59.6% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests an increase of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has rallied 9.5% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and 26.2% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 137.9%, on average. The stock has gained 43.6% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales suggests an improvement of 0.9% but the EPS indicates a decline of 2.8% from the year-ago period’s levels.