McDonald’s (NYSE:MCD) stock has been surging of late, now up more than 16% from its October lows in a V-shaped recovery. The fast-food icon enjoyed a fast bounce back from the weight-loss-drug-fueled plunge and could be headed to even higher highs as the company looks to jolt growth with two transformative efforts: a complete burger overhaul and the launch of the CosMc’s store model.
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I’m incredibly bullish on MCD stock as the company looks to move forward with its incredibly forward-thinking projects under the leadership of fantastic CEO Chris Kempczinski. Indeed, there’s a lot of market share to nibble away at if a new burger formulation and store concept are able to draw even larger crowds. Personally, I believe both efforts will help McDonald’s command a higher multiple as it looks to give its sales growth a shot in the arm.
McDonald’s Burger Revamp Could Pay Off as it Looks to Gain in Burger Scene
McDonald’s has ambitious plans to revamp its burger in 2024 to better compete with the crowded high-end burger rivals. That’s not to say there’s anything wrong with the current burger formulation. Nonetheless, I do think there is a lot to gain by rolling out changes to make its food taste better, perhaps more like the original McDonald’s burgers that were offered many decades ago before McDonald’s went all-in on value and cost efficiencies.
By making changes to everything from the bun to lettuce and even how the beef patties are prepared, McDonald’s hopes to win new customers by focusing on improving upon the quality factor. Indeed, driving costs lower has been a focal point of traditional fast-food firms for quite a while now. Low prices are the main reason why people go to fast-food restaurants over dine-in ones, after all.
The times are changing, though. With all the intense competition in the quick-service restaurant scene and the rise of new upscale fast-food burger chains (think Culver’s Restaurant), it’s no longer good enough to just be “fast” or offer low-cost eats.
McDonald’s has seemingly mastered the art of getting meals in customers’ hands as quickly and efficiently as possible. As the company looks to balance higher-quality burgers with its competitive prices, I think the company may be kicking off a new leg of growth that could take its stock to epic, new highs.
Undoubtedly, it’s always risky to introduce big changes to a flagship item. That said, I don’t view McDonald’s as having as much to lose, given the nature of the improvements. Who wouldn’t want their McDonald’s burger to have crispier lettuce, a moister bun, meltier cheese, and perfectly grilled beef patties?
Such major changes to a major menu item, I believe, could change the way we all look at McDonald’s. Sure, the chain will probably never be viewed as gourmet, but it may be able to stack up with the likes of the very best in the higher end of the fast-food chain.
As long as they don’t change their fries, I welcome any menu changes with open arms.
McDonald’s Opens Very First CosMc’s Spin-Off Store
This week, McDonald’s opened its very first CosMc’s store, and an early glimpse into the new store concept is intriguing, to say the least. The opening marks the first of 10 as the firm looks to test the waters with the innovative, new concept that’s geared towards folks seeking to grab a quick coffee and snack.
Only time will tell if the new concept is able to disrupt the chain coffee store scene. Given the company’s expertise in the drive-thru, I believe the new concept has the potential to be a profound success. Of course, we’ll have to wait and see what the reviews are like for the new exclusive menu offerings, which include very intriguing beverage items like S’Mores Cold Brew and Tropical Spiceade.
In any case, if I were an independent coffee chain, I’d be pretty worried if there were a CosMc’s location opening up close by. It definitely stands out as a spin-off concept with disruptive potential.
Is MCD Stock a Buy, According to Analysts?
On TipRanks, MCD stock comes in as a Strong Buy. Out of 28 analyst ratings, there are 23 Buys and five Hold recommendations. The average McDonald’s price target is $314.85, implying upside potential of 9.8%. Analyst price targets range from a low of $270.00 per share to a high of $383.00 per share.
The Bottom Line
McDonald’s seems destined for greater growth as it innovates with new store concepts while seeking to roll out positive changes with its burgers. If either the reformulated burger or CosMc’s hits the spot, McDonald’s will have a new growth driver on its hands that can help it gain market share in the burger and coffee-and-snack markets, respectively. McDonald’s under the Kempczinski (MCD’s current CEO) era has proven bold and could become even bolder going into the new year.
