Throughout the past few years, McDonald’s (MCD, Financial) has struggled mainly due to food safety incidents in Asia and escalating competition. The stock remained almost flat during these troubles, whereas the company’s bottom-line moved downward successively from 2013 to 2015.
However, the arrival of new CEO Steve Easterbrook in 2015 changed McDonald’s prospects completely. The company improved considerably under the tenure of Easterbrook and it may continue improving due to several reasons.
Nowadays, consumers are shifting towards eating healthy food. Therefore, to take advantage of this opportunity, the company took various steps such as removing antibiotics from chicken and using only cage-free eggs. Moreover, it has cut the salt, fat and sugar content in its burgers and chips. It also announced healthier options like grilled chicken, raw vegetables, fruit and salads.
McDonald’s also introduced several successful programs such as all-day breakfast in the U.S., which became very popular and has also brought the company up to the swiftness of varying food tastes.
Moving onward, the company has strategized to refranchise hundreds of its owned restaurants, with a long-term target of having 95% of its restaurants franchised. It’s a tactic that has been successfully carried out by other competitors. Apart from this, throughout the imminent few years, the company plans to add approximately 1,000 new stores in China.
On the other hand, sugary drink consumption is declining at a rapid pace whereas, as a substitute, the consumption of coffee is escalating at a healthy rate. The retail coffee industry is projected to bring in approximately $46 billion this year and is escalating at around 4% per year.
The company has been operating the McCafe for over 20 years, but it has a whole new different concept. McCafe stores would have a superior prospect of creating a reliable consumer base thanks to this changing trend, and McDonald’s stands to benefit from it.
Disclosure: No position in any of the stocks.
