McDonald's can redeem itself believes Deutsche Bank
According to a recent report published by Deutsche Bank, the company which does coverage on various firms recently targeted the fast-food giant, McDonald's Corporation. The bank is relatively optimistic about the future of this company and has thus given McDonald's stocks a “Buy” rating along with an average price target of $120. Moreover, they also believe that the company has a potential to experience a 24 percent upside considering the current trading price.
Karen Short, a renowned analyst stated that several investor’s believe that McDonald’s restaurant “arches are broken” but according to the company, the fast food behemoth “remains an iconic global and fixable brand.” Mr. Karen believes that the company has immense potential to redeem its position under the able leadership of the new chief executive officer Mr. Steve Easterbrook.
According to consensus, the company has been missing on earnings estimates since the past five consecutive quarters where their sales have been staggering at a steady pace. However, the strategy implemented by Mr. Easterbrook is extremely effective and can change the game for them once again. According to the analysts, the company is embracing a cultural change that allows them to question the “once off-limit strategies” with the power to get rid of the sacred goat ideology. This is a major breakthrough which will help the company to innovate and come up with new technologies that can result in efficiency.
Recently Mr, Steve Easterbrook came up with a video that dealt with the company’s upcoming plans in which he wishes to cut down on the long tiers of management and start focusing on ways that can drive customer satisfaction. He understands that the company has been dealing with several shortcomings and his agenda is to “We need to execute fewer things better,” as mentioned in the video.
Apart from this the company has plans to franchise almost 3500 outlets by F18. So once they are successful in doing so than 90% of the total outlets will be franchised. The Deutsche Bank analyst considers this a well thought out plan by Mr. Steve Easterbrook that will help the shareholders to a raise in capital return,
Despite Deutsche Bank is extremely positive about McDonald’s performance but even then the company needs to take several major steps to fight back. Mr. Easterbrook has taken several initiatives that have proved fruitful, but a lot more needs to be done so that they can attain stability once again.
McDonald's continues to stumble in Q1 despite efforts to improve.
With many companies revealing their earnings report for the first quarter, McDonald Corporation has also unveiled their report. With this report of their performance in the first quarter, things are already a mess for them.According to the report, the company experienced a massive decline in sales during the first quarter of fiscal year of 2015. The company’s business is stumbling since more United States consumers are opting out of fast food franchises and going towards healthier alternatives. The company’s performance has been disappointing in United States, Asia and Europe. McDonald’s restaurant during this tenure has taken several initiatives to revive it, but it seems like things are not willing to go their way.The company’s problems are not short term but date back to the past few quarters where their performance has continuously slacked. MCD has tried to accustom itself to the changes in consumer demand but have not really succeeding in doing something concrete. They also came up with a complex menu, but companies like Chipotle Mexican Grill and Panera Bread tend to take the limelight away from them.Wall Street had earlier predicted that McDonald’s stock performance would stagger by 1.8 per cent. However, the company also crossed that benchmark where now its stocks have gone down by 2.3%.The company initiated several competitions and incentives based policies so that they could gain more diners but despite efforts sales fell by 2.6 per cent within United States. Moreover, the largest market for McDonald’s resides in Europe, but even then they struggled to a great extent in Russia and France. However, the company believes that the weak economy is the prime reason behind their stumbling in United Kingdom.Apart from this, the food safety scare that occurred in Asia and Middle East resulted in a drop in sales by 8.3 per cent. Thus, all in all, the sales record has resulted in the operating profit margins of the company to compound to 28 percent for Q1.The company itself believes that this will continue for them in the months ahead as it expects sales to decline even further.Mr. Steve Easterbrook, the new chief executive officer of McDonald’s has taken several initiates that will help them pave their way to glory. This includes a comparatively simplified menu, the company put an end to stores that were not doing well and also worked on increasing the wages of employees. However, the efforts taken seem all in vain. “McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace,” mentioned Easterbrook in a statement.
