McDonald’s Stock Profits from Expansion & Innovation Efforts

McDonald's Stock

McDonald’s Stock (NYSE:MCD)

McDonald’s Corporation (NYSE:MCD) has been reporting solid comps growth because it places a strong emphasis on menu innovation, price tactics, loyalty programs, increased digitalization, and a strong operating performance strategy.

McDonald’s has successfully navigated various macroeconomic challenges, such as COVID-related, global political restrictions, the war between Russia and Ukraine, and inflationary cost pressures, by taking prudent initiatives to drive growth in both the domestic and international markets. It is commendable that it is putting so much emphasis on loyalty programs and growth attempts.

The fact that McDonald’s stock has a long-term earnings growth rate of 8.2% indicates its intrinsic strength. 

Over the past twelve months, shares of MCD have increased by 7.4%.

Estimates have been on an upward trajectory over the past month due to experts raising their projections for the upcoming period. The Consensus Estimate for 2023 has increased to $10.45, up from $10.44 throughout the time mentioned above the frame. The Consensus Estimate implies a growth rate of 5.3% from one year to the next for 2023 earnings of $10.45 per share.

Influencing Factors

The initiative taken by McDonald’s to innovate the menu and implement strategic pricing has resulted in a rise in the number of guests, which has led to an increase in sales in the United States. The company successfully extended its coffee business during the second quarter of 2022 by introducing Australiano coffee in Australia. McDonald’s was pleased with the reception it received from customers. Additionally, the company’s initiative of establishing superior cooking techniques and rolling out new buns prepared the way for solid consumer response and incremental sales following its launch in Spain. This was accomplished by paving the way with new buns.

Comparable global sales increased by 9.5% during the third quarter of 2022. This was the seventh consecutive quarter in which comparable sales increased. Comparable sales increased during the third quarter in the United States by 6.1%, 8.5%, and 16.7%, respectively, in the international operated markets (IOM), and the international developmental licensed (IDL) segments, respectively. Japan and Latin America both reported healthy increases in year-over-year comparable sales. In Japan, McDonald’s recorded a rise in comparable sales for the 28th consecutive quarter.

The company achieved a strong and efficient operational performance in the globally managed markets of Germany, France, and Australia, which resulted in an increase in comparable sales for the company. Comparable sales in Brazil and Japan boosted the company’s top line.

This leading fast-food company, based in Oak Brook, Illinois, is receiving assistance from robust digitalization in its efforts to increase sales in international markets. McDonald’s is progressing toward its Experience of the Future initiative, which is based on adding technology to its eateries. As part of this initiative, the company is rolling out self-order kiosks, digital menu boards, table service, and a mobile app. By doing so, the company is providing customers with more options and flexibility.

It is important to note that the loyalty program offered by McDonald’s has not only assisted in keeping the present consumers but has also assisted in increasing the customer base. The corporation has previously launched a customer loyalty program in over 50 different areas, some of which include the United States of America, Germany, Canada, the United Kingdom, and Australia.

The company’s ongoing growth activities are also driving the performance of McDonald’s stock. Despite the unfavorable circumstances, the organization is persisting in expanding its presence globally. It has plans to open more than 1,800 restaurants around the world in 2022, with 500 of those restaurants located in the United States and IOM market segment and 1,300 of those locations located in the IDL market, with roughly 800 of those restaurants located in China. The expansion of the restaurant business is anticipated to reach almost 3.5% in 2022 by McDonald’s.

Featured Image: Pexels @ Olavi Anttila

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About the author: Stephanie Bedard-Chateauneuf has over four years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on consumer stocks, cannabis stocks, tech stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.