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Yahoo
3 days ago
- Business
- Yahoo
MCD vs. YUM: Which Restaurant Stock is Better Positioned Now?
McDonald's Corporation MCD and Yum! Brands, Inc. YUM are two global powerhouses in the quick-service restaurant industry. Both companies operate extensive international networks and primarily use a franchised business model. In recent years, both McDonald's and Yum! Brands have prioritized digital innovation and global expansion as key strategies to drive growth and enhance customer broader restaurant industry continues to gain from higher menu pricing, average check growth and aggressive expansion. Both companies are also seeing positive momentum from strategic partnerships with third-party delivery services and ongoing digital said, there are a few challenges that affect the companies. Elevated labor costs and persistent food inflation are squeezing margins. Additionally, inflation-driven menu price hikes are beginning to impact customer traffic in certain the current mix of industry tailwinds and headwinds, which stock, McDonald's or Yum! Brands, offers the better value for investors today? Let us take a closer look to find out. The company's strong record of innovation, leadership and adaptability continues to position it for success, even amid challenging market conditions. McDonald's is the world's largest chain of fast-food restaurants, with a presence in more than 100 countries. Its offerings have reached the billion-dollar brand status through sustained product innovation and geographic company is also focusing on expansion efforts. McDonald's plans to open 2,200 restaurants globally in 2025. McDonald's expects to open 600 restaurants in the United States and international operated markets. MCD also plans to open more than 1,600 restaurants in the International Developmental Licensed segment, including 1,000 in China. It aims to open 50,000 restaurants by is focused on menu innovation to drive growth, emphasizing its core billion-dollar brands and expanding affordable offerings. In 2025, it launched the McValue platform in the United States, and introduced everyday affordable price menus and value bundles in key international markets, including Canada. The company also debuted McCrispy Chicken Strips nationwide and is testing new beverages inspired by CosMc's. With McCrispy now in 70 markets and a new chicken item planned for 2026, McDonald's continues to strengthen its global chicken portfolio and value-driven menu since the launch of the loyalty program in the United States, MCD has been able to transform its offerings across drive-thru, takeaway, delivery, curbside pick-up and dine-in. The company has already introduced a loyalty program in more than 60 markets, including the United States, Germany, Canada, the U.K., Australia and increased digital adoption, the company is optimistic about its loyalty members' growth trend. Since the launch of its loyalty program, the total number of 90-day active users has reached more than 170 million. Furthermore, in 2024, the system-wide sales to loyalty members were about $30 billion. It anticipates reaching 90-day active users to 250 million with $45 billion in annual loyalty system-wide sales by the end of 2027. YUM! Brands is gaining traction with its next-generation growth initiatives aimed at capturing evolving consumer preferences. YUM's 'easy operations' pillar is focused on streamlining restaurant operations and empowering team members. In the first quarter 2025, the company extended its Byte Restaurant Coach tool to an additional 5,000 stores. This digital platform supports consistent and scalable performance management through routine tools and training. Meanwhile, Taco Bell U.S. onboarded 1,500 more restaurants to the Byte Back of House platform, raising the total to 3,000 stores. This progress marks a step forward in developing a fully connected kitchen ecosystem aimed at enhancing efficiency and enabling data-driven operational decisions. YUM plans for full system-wide adoption in Brands reported steady progress in global development in the first quarter, with 751 store openings across 68 countries. KFC led the development effort, opening 528 units — the second-highest first-quarter total in the brand's history — driven by strong performance in key markets such as China, India, Japan and Thailand. With a global average payback period of less than five years, and even more attractive returns in China, Thailand and the Middle East, KFC continues to be a cornerstone of YUM's expansion Pizza Hut added 198 stores in 34 markets, and Taco Bell posted 24 gross openings. Though Taco Bell's net unit growth was affected by strategic closures in Malaysia and China's Tier 2 cities, the brand remains on track to achieve 100 net international openings in 2025, with momentum strongest in the U.K., Spain and company is also gaining from robust comps growth. In the first quarter of 2025, worldwide comps at Yum! Brands increased 3% year over year compared with a 1% rise in the previous quarter. The improvement was fueled by robust growth across multiple international markets, including a 13% comp increase in Korea, 8% in Africa and 6% in Canada, aided by localized innovation and value-led aims to drive comp growth in 2025 through deeper market penetration and an expanded range of offerings like tenders, nuggets, twisters and sandwiches. The Zacks Consensus Estimate for McDonald's 2025 sales and EPS implies year-over-year growth of 1.6% and 4.4%, respectively. Earnings estimates for 2025 have witnessed upward revisions of 0.2% in the past 30 days. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Yum! Brands' 2025 sales implies a year-over-year increase of 6.8% and the same for EPS indicates a gain of 9.7%. Earnings estimates for 2025 have witnessed upward revisions of 0.3% in the past 30 days. Image Source: Zacks Investment Research The MCD stock has gained 7.6% in the year-to-date period compared with the industry and the S&P 500's 0.5% growth and 0.3% decline, respectively. Conversely, YUM shares have risen 7.4% in the same time frame. Image Source: Zacks Investment Research MCD is trading at a forward 12-month price-to-earnings ratio of 24.69X, above its median of 23.72X over the last year. YUM's forward earnings multiple is 22.99X, slightly below its median of 22.68X over the same time frame. Image Source: Zacks Investment Research Yum! Brands appears slightly ahead of McDonald's at the moment due to its stronger expected earnings and sales growth trajectory, driven by aggressive global expansion, faster same-store sales growth across key international markets, and deeper digital integration in operations. While McDonald's remains a solid performer with robust loyalty engagement and expansion plans, YUM's more dynamic international development, broader innovation pipeline and higher earnings momentum suggest that it is currently executing more effectively on growth opportunities. Both YUM and MCD currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McDonald's Corporation (MCD) : Free Stock Analysis Report Yum! Brands, Inc. (YUM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Fehler beim Abrufen der Daten Melden Sie sich an, um Ihr Portfolio aufzurufen. Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten
Yahoo
05-05-2025
- Business
- Yahoo
MCD Q1 Earnings Call: Consumer Pressure, Menu Innovation, and Value Initiatives Shape Outlook
Fast-food chain McDonald's (NYSE:MCD) missed Wall Street's revenue expectations in Q1 CY2025, with sales falling 3.5% year on year to $5.96 billion. Its non-GAAP profit of $2.67 per share was in line with analysts' consensus estimates. Is now the time to buy MCD? Find out in our full research report (it's free). Revenue: $5.96 billion vs analyst estimates of $6.12 billion (3.5% year-on-year decline, 2.7% miss) Adjusted EPS: $2.67 vs analyst estimates of $2.67 (in line) Adjusted EBITDA: $3.19 billion vs analyst estimates of $3.28 billion (53.5% margin, 2.8% miss) Operating Margin: 44.5%, in line with the same quarter last year Free Cash Flow Margin: 34.2%, up from 29.9% in the same quarter last year Locations: 43,756 at quarter end, up from 42,018 in the same quarter last year Same-Store Sales fell 1% year on year (1.9% in the same quarter last year) Market Capitalization: $223.1 billion McDonald's first quarter results were shaped by broad-based consumer pressures, particularly among low and middle income groups, as management cited macroeconomic uncertainty and dampened industry traffic in key markets. CEO Chris Kempczinski pointed to the impact of inflation and reduced consumer sentiment, especially in the U.S., noting, 'Unlike a few months ago, QSR traffic from middle income consumers fell nearly as much [as low income], a clear indication that the economic pressure on traffic has broadened.' Looking forward, management remains cautious about the near-term environment but expects improvement as new value offerings and menu innovation roll out. Kempczinski emphasized the importance of operational execution and highlighted upcoming product launches, including McCrispy Chicken Strips and expanded beverage offerings. While the leadership team reaffirmed its full-year targets, CFO Ian Borden noted, 'We remain focused on optimizing our run the business spend as we continue to invest in our strategic growth priorities, such as digital and technology.' Management attributed first quarter performance to a combination of consumer headwinds, strategic value initiatives, and operational changes across major markets. Wall Street's revenue expectations were not met due to industry traffic declines, particularly among lower income consumers. Forward-looking commentary emphasized the need for ongoing menu innovation, improved value perception, and operational discipline. U.S. Value Platform Expansion: The launch of the McValue platform, including the $5 Meal Deal, was central to management's response to declining guest counts. Management described the program as 'resonating with customers' and expects it to continue throughout 2025. Menu Innovation Pipeline: New products such as McCrispy Chicken Strips and upcoming snack wraps are intended to drive incremental traffic. Management sees these innovations as key to attracting new and returning customers. International Market Performance: While most major international markets faced similar pressures, management highlighted market share gains in France following value-focused initiatives and menu news like the Big Arch burger. Operational Structure Changes: McDonald's established a global Restaurant Experience Team and introduced category leadership for beef, chicken, and beverages. This is designed to accelerate product innovation and improve execution across markets. Customer Satisfaction Focus: The company reported all-time high customer satisfaction scores in the U.S. and major international markets, attributing improvements to both value platforms and operational enhancements. Management's outlook for the remainder of the year is shaped by continued economic uncertainty, but is anchored in expanded value platforms, new product launches, and a focus on operational execution to drive guest count-led growth. Macroeconomic Headwinds Persist: Management remains cautious about consumer sentiment, especially among low and middle income groups, and acknowledges ongoing challenges from inflation and global uncertainty. Product and Marketing Rollouts: Upcoming launches such as McCrispy Chicken Strips, expanded beverage tests, and brand partnerships (e.g., Minecraft Movie campaign) are expected to support sales momentum. Execution and Cost Discipline: Management emphasized the importance of running efficient operations, optimizing spending, and leveraging digital and technology investments to protect margins and support growth. Dennis Geiger (UBS): Asked about U.S. sales trajectory given early success with the Minecraft campaign and new menu items. Kempczinski noted momentum is expected to build as the year progresses, with execution remaining key in a pressured environment. David Tarantino (Baird): Inquired if the McValue platform requires sharper price points to drive incrementality. Kempczinski said the $5 Meal Deal is performing well but is open to adjustments for greater impact. Brian Harbour (Morgan Stanley): Questioned if there is risk of negative mix shift as more value items are introduced. Borden explained that value and innovation must be balanced to ensure both traffic and profitability. Jon Tower (Citi): Sought details on the beverage test and its potential impact. Kempczinski described the opportunity for higher-margin growth but said investment needs and positioning are still being evaluated. Sara Senatore (Bank of America): Asked if QSR traffic declines reflect share loss to other segments. Kempczinski argued that reduced visit frequency, not segment shift, is the main driver, especially in breakfast and other dayparts. In the coming quarters, the StockStory team will be monitoring (1) the effectiveness of new value initiatives and menu innovations in stabilizing U.S. guest counts, (2) the operational impact of the global Restaurant Experience Team on product rollouts and execution, and (3) progress in international markets, particularly regarding market share gains and consumer sentiment. These factors will be critical to tracking McDonald's ability to regain momentum. McDonald's currently trades at a forward P/E ratio of 25.3×. Should you double down or take your chips? See for yourself in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
02-05-2025
- Business
- Yahoo
McDonald's Corp (MCD) Q1 2025 Earnings Call Highlights: Navigating Consumer Challenges and ...
Global Comp Sales: Declined by 1% in the first quarter. US Comp Sales: Declined 3.6% due to broad-based consumer challenges. Adjusted Earnings Per Share: $2.67 for the quarter, a 1% increase in constant currencies. Restaurant Margins: Generated over $3.3 billion for the quarter. Adjusted Operating Margin: Approximately 45.5%. International Developmental Licensed Markets Comp Sales: Increased by 3.5%, driven by positive results in the Middle East and Japan. Foreign Currency Translation Impact: $0.04 headwind on earnings per share. Warning! GuruFocus has detected 2 Warning Sign with AME. Release Date: May 01, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. McDonald's Corp (NYSE:MCD) has launched a new McValue platform in the US, which includes a $5 meal deal that has resonated well with customers. The company has introduced exciting new menu items, such as McCrispy Chicken Strips, which are expected to drive growth. McDonald's Corp (NYSE:MCD) has achieved all-time high customer satisfaction scores in the US, indicating strong operational execution. The Minecraft movie marketing campaign was a success, with collectibles selling out faster than anticipated, demonstrating effective promotional strategies. The company is focusing on beverages as a growth area, with plans to expand its offerings and capture a larger share of the profit pool in this category. Global comp sales declined by 1% in the first quarter, with a 3.6% decline in the US, reflecting broad-based consumer challenges. Traffic from low- and middle-income consumers in the US has significantly decreased, indicating economic pressures on these cohorts. The UK market is not yet gaining share, and execution improvements are needed to address this issue. The company faces a more inflationary environment in Europe, particularly due to beef prices, which impacts profitability. Despite the success of the McValue platform, the buy-one-add-one-for-a-dollar component is not driving as much incrementality as expected. Q: Can you discuss the recent US sales trajectory and momentum, considering the consumer pressures and the impact of the Minecraft marketing campaign? A: Christopher Kempczinski, CEO, noted that the year is evolving as expected, with Q1 being the toughest quarter. The Minecraft promotion exceeded expectations, selling out collectibles in 10-14 days. The focus now is on execution, especially in a pressured consumer environment, to drive growth through value programs, marketing, and menu innovation. Q: How do the consumer dynamics and McDonald's value perception differ in key international markets compared to the US? A: Kempczinski highlighted that Europe is challenging due to high inflation, particularly in beef. However, strong value programs and marketing can drive performance. In China, the business has stabilized, and Japan is performing solidly. The US faces significant pressure from low-income consumers, with traffic declines nearly 10%. Q: How is the US McValue platform performing, and are adjustments needed? A: Kempczinski explained that the McValue platform is designed to be agile. The $5 meal deal is performing well, driving significant incrementality. However, the "buy one, add one for a dollar" component is not as incremental, and adjustments may be considered to enhance performance. Q: With mid-single-digit menu pricing in the US, how do you manage the spread between value and premium offerings? A: Kempczinski emphasized the importance of balancing strong value programs with full-margin marketing and menu innovation. The focus is on disciplined pricing and ensuring that the overall P&L works for both franchisees and the company. Q: Are there any signs of international boycotts affecting McDonald's, and how are you addressing this? A: Kempczinski stated that surveys show no change in consumer sentiment towards McDonald's despite some anti-American sentiment. The brand remains strong globally, with no impact on business. The franchise model, with local operators, helps adapt to cultural nuances. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
