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What's going on?
Yum yum. McDonalds stock jumped 3% on Friday after it reported that its sales grew more than expected. It was thanks, primarily, to a big pickup in sales outside of the US.
What does this mean?
Global sales grew by 3.5%, much higher than the 1.5% growth that was expected, while US sales were in-line with expectations at 1.3%. The company didnt really attribute the international performance to much beyond saying that there was strength across the board (except in China, where anti-US protests hurt sales). But the relatively strong performance gels with an overall plan to reinvigorate McDonalds, which began about 18 months ago when a new CEO was hired.
Why should I care?
The bigger picture: Even burger joints are becoming tech companies.
A big part of McDonalds plan for future growth is to improve its in-store experience (and increase its efficiency) by implementing things like self-order kiosks and a mobile app. McDonalds calls this the experience of the future. Expect it to be mimicked by other fast food restaurants and coffee chains (like Starbucks).
For the stock: Its about to get a lot tougher for McDonalds to increase its sales.
About a year ago, McDonalds introduced all-day breakfast in the US. The impact on sales was much more positive than many thought it would be. The problem, however, is that its now tougher to grow sales going forward (remember, sales growth is typically compared to the same quarter one year before). Improved technology will help as will rolling out some of the successful US initiatives, like all-day breakfast, in other countries but investors are bracing for declining growth (which is one reason why its stock is still 13% down from its peak price, which it reached earlier this year).
Originally posted as part of the Finimize daily email.
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