about 1 month ago • 1 min
What’s going on here?
McDonald’s reported golden third-quarter results on Monday, and they may be worth some lovin’.
What does this mean?
Investors have been keeping McDonald’s at arm’s length, wary that the US’s new obsession with weight-loss drugs won’t exactly jibe with Happy Meals. But it seems the fast food giant kept its “Supersize Me” spirit: by beefing up prices, McDonald’s managed to make 9% more in same-store sales – that's sales from restaurants open for at least a year – and better-than-expected profit. Wall Street even reckons that this hustle could leave the company’s bottom line 15% higher at the end of this year than last. Maybe, then, investors are being too cautious. After all, every dieter craves a chicken nugget now and then.
Why should I care?
The bigger picture: Death, taxes, and Big Macs.
McDonald’s has survived many health-conscious waves before, mind you. The first salad appeared on the menu almost forty years ago, and a number of savvy offerings and even smarter marketing strategies have managed to keep McDonald’s reputation shining ever since. So even if this health craze is the one that sticks, a few grilled burger alternatives and low-calorie dips may well keep the Golden Arches glowing.
For markets: Spot the difference.
Instead of swallowing rising costs itself, McDonald’s has been serving them up to its money-conscious customers. And it’s not alone: just about every business that can get away with it is doing the same. Thing is, inflation – and its impact on costs – will come down at some point. When that happens, some firms will need to lower prices again to keep customers coming back, while others will be able to get away with keeping prices where they are and pocketing the difference.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.