Angst and Anticipation Under the Golden Arches

Editor’s Note: I must admit that I like to eat fast food every once in a while. I know it’s not good for me but sometimes I just feel like having a burger and fries.

So does Fiona, my daughter’s dog that I enjoy spending time with. After driving her to the dog park, I’ll stop by McDonald’s on our way home to get her a plain McDouble from their value menu.

At first, my daughter chose to look the other way when I returned Fiona to her house reeking of beef and cheese. But now she is a McDouble convert, so I no longer hide the food wrappers under my car seat before I get Fiona back home. Life is full of small victories!

Easy as Pie?

Apparently, a lot of other people besides me have been shopping the value menu at McDonald’s (NYSE: MCD). With food prices rising, saving a few bucks on a meal is necessary for some folks to make ends meet.

That helps their bank account but is not beneficial to McDonald’s bottom line. Cherry picking items a la carte from the value menu is both time consuming and less profitable.

If it were up to McDonald’s, every customer would order an extra-large combo meal with an apple pie on the side. These days, that will set you back $10 or more.

That’s why the value menu has become critical to the company’s performance. If consumers cannot easily order what they want at a price they can afford, they may go somewhere else for their next meal.

McDoubling Down on Value Meals

Last week the company launched McValue, its new national value meal product line announced in November. It is modeled after the $5 meal deal it experimented with last summer that was deemed a success.

I have no doubt that consumers will welcome this new pricing structure with open arms (and mouths). For about half the cost of a traditional combo meal, consumers can purchase a meal that should fill them up.

However, I’m not so sure the increase in sales volume will necessarily translate into higher profits. Smaller profit margins require higher volume to maintain aggregate profitability.

A Big Nothing Burger in 2024

In that respect, McDonald’s doesn’t have much to lose. During the third quarter of 2024, its diluted earnings per share (EPS) decreased one percent on a year-over-year basis.

That decline occurred while the company’s consolidated revenues increased by three percent. That’s not the type of trend that Wall Street likes to see.

Not only does that inform the sudden introduction of the McValue meal. It also explains why MCD gained no ground in 2024.

That result is particularly notable given the 25 percent rise in the Dow Jones Industrial Average last year, of which McDonald’s is a component. You can bet there a lot of nervous company executives praying the McValue product is a huge hit.

Shake it Up in 2025

We may find out how the McValue menu is being received next month. That’s when McDonald’s will release its Q4 and full year results for 2024 along with guidance for the current quarter.

Since McValue was introduced at the start of this quarter, the company may choose to mention it in their guidance if the initial response is favorable. If not, then they may wait until they release their first quarter results in April to talk about it.

Thus far, Wall Street is non-plussed by this development. That’s because “burger wars” are more about capturing market share than increasing profits.

McDonald’s is hoping to do both. And if Fiona has her way, they will!


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