Takeaway: Put the focus back on the core menu and worry less about expanding it.
McDonald’s (MCD) has faced pressure from the overall global macroeconomic environment this year. It’s not like high unemployment in the US and the problems facing Europe are helping sales on a global basis. But McDonald’s faces issues other than the global macro problems out there as sales slow; companies like Five Guys and Shake Shack are slowly creeping in and taking away share from MCD.
We believe McDonald’s needs to refocus its attention to its core business. All the expansion over the years has left this segment vulnerable and management needs to make changes to its strategy in order to succeed. Simplifying the menu rather than expanding it would be one positive step in the right direction, as well as toning down the company’s overall complex strategy. Perhaps then we’ll be less bearish on the stock than we are now.