• HEDGEYE’S MARKET BRIEF
    Our FREE Investing Newsletter
    Get Exclusive Summer Sale Discounts

    By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. All Hedgeye products and services are subject to Hedgeye’s Terms of Service available at www.hedgeye.com/terms_of_service

In the second quarter, MCD’s same-store sales increased 3.8% - that’s the good news. The bad news is that 75% of MCD’s same-store sales gain was traffic. With MCD having raised prices by 4%, the average check is declining significantly. Can you imagine what the franchise community is thinking! Inflation is everywhere and people are spending less in our restaurants. But we have more of them!

So what is driving the check lower?

First, the average check at breakfast is lower than the rest of the day. Second, the focus on beverages is putting downward pressure on the check as not every purchase is with a full meal. Third, the push to advertise the dollar menu at the expense of full priced items is putting pressure on the check.

Senior management at MCD believes this is “healthy.” Healthy for whom? To help stabilize margins MCD is dependent on raising menu prices. So the trend is for customers to buy lower priced items and at the same time the company is raising prices.

  • Something has to give!