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On Tuesday, McDonald's (MCD) announced that November same-store sales increased 0.7%. Great news, right? Well, the fast-food pioneer's sales dropped 0.6% in America, but increased 2.5% in Europe. MCD blames the drop in the United States on the sluggish economy, although the house of Ronald managed to outperform a majority of its American competitors.
Here is my question, hasn't the economic situation gotten better in America? Why would McDonald's sales suddenly slump just as it seems the economy is in recovery mode? Are we as Americans now more accustomed to eating at home thanks to tightening purse strings? Now that the economy is recovering, do we have a taste for better fast-food options? Are we finally tired of McDonald's?
Technically, MCD is in great shape. The equity's current uptrend dates back to the beginning of 2003 and currently has the shares positioned in the $60 region. This region has proven a bit of a struggle for MCD, and the November sales news is not going to do the stock any favors. There is potential support in place, in the form of McDonald's 10-month moving average, so the stock may not fall far thanks to the news.
Nevertheless, could we finally see a chink in the armor of McDonald's? Are sales going to slip as the economy recovers? My guess is that this is a one-time situation, as McDonald's will always offer "value" for the money. It may take some time for us to find out.
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Reader Comments (Page 1 of 1)
12-09-2009 @ 11:43AM
Iridium said...
Maybe just maybe hiking the price of a Big Mac meal from $3.80 to $5.20-$5.80 wasn't such a good idea. $7.50 for an Angus meal? Not when far superior hamburgers are available from real restaurants for less.
McDonalds is now the most expensive of the major fast food chains. Make no mistake people are figuring this out and they don't want to spend over $5 for a Big Mac meal. Store sales were higher in September because McDonalds ran the $4 meal deal. A Big Mac Meal was only $.20 more expensive than a couple years ago and the people liked that.
12-09-2009 @ 1:15PM
clikdawg said...
"Is there a chink in McDonald's armor?"
Improperly reheated Quarter Pounders with Cheese.
12-09-2009 @ 2:16PM
tom said...
i'm using histocky.com to check the history price movement of MCD.
12-09-2009 @ 4:31PM
Richard Adams said...
Due to min. wage increases and back door costs McDonald's franchisees (and company stores) raised menu prices all through 2008. For the past few months we have been lapping those increases and cannot raise prices any further.