Legend has long foretold that breakfast is the most important meal of the day. Every culture has their approach to the meal. A typical Japanese breakfast includes toast, coffee and fruits, as well as a bowl of rice and miso soup, whereas a full English breakfast consists of fried bacon, poached eggs, fried green tomatoes, fried bread (common theme, anyone), “bangers” (sausage), baked beans and, if you still have a pulse, a cup of black tea.
As for American breakfast fare, we love McDonald’s (MCD). The Egg McMuffin, that oblongly shaped hash-browned potato thing, and a cup of boiling hot, law-suit ready, coffee that’ll surely put hair on your chest.
Well, McDonald’s (MCD) breakfast food might be coming upstream for investors, because as of recent, the fast-food giant has shown that even the largest brands in history aren’t bulletproof. Though the company’s most recent quarterly-earnings beat estimates from the street, U.S. sales have slowed and revenue has dropped nearly 15% over the last year.
In July, public health officials discovered an outbreak of cyclosporiasis in lettuce used by fast food chains around the United States. The Centers for Disease Control and Prevention reported that many of these tracings were found in McDonald’s (MCD) lettuce supply. McDonald’s quickly addressed the issue and replaced the nasty greens.
In light of revenue declinations as faulty lettuce, McDonald’s (MCD) announced, on in company’s third-quarter earnings call on Tuesday, that they plan on introducing a brand new breakfast menu. The food chain’s CEO Steve Easterbrook, echoed the adage that “Breakfast remains an opportunity,” going on to mention plans to launch a new meal deal that will include the classic menu offerings, so customers can get a “satisfying meal for an affordable price.” In response to the news, McDonald’s (MCD) shares rose 6%, to $177.15 per share after the market closed.
“We’re confident that our strategy will drive long-term, profitable growth.”
–Steve Easterbrook, Chief Executive Officer McDonald’s
McDonald’s has made attempts to revive their revenue streams by refurbishing restaurants and adding upgrades like “self-order kiosks and table service,” according to CNBC. The company has altered their menu before, including fresh beef hamburgers, new coffee drinks, and partnering with Uber Eats to deliver Big Macs to consumers worldwide.
I can’t say that I’ve ever found myself craving a McDonald’s burger, in general, let alone so much that I won’t drive myself to a location. Then again, I am sure many Americans order fast-food on Uber Eats all the time.
According to recent reports, McDonald’s (MCD) renovates roughy 1,000 of their stores per quarter in the United States and anticipates spending $1.6 million domestically this year to ramp up the remodeling process for these locations. Easterbrook said that the company plans on completing more than 12,000 restaurants by 2020.
“This is the largest construction project in our history. We still have hard work ahead but we are seeing encouraging responses from customers in restaurants where many of these improvements already completed. This is in line with our experience in other McDonald’s markets such as Canada, the U.K., and Italy that executed programs several years ago…”
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Easterbrook, CEO McDonald’s
Analysts agree with the fast-food giant’s decision to reinvent their menu offerings. Menu innovation keeps the brand fresh and entices customers, new and old, to come in and try a new menu item. While rivals like Burger King seem to release a new item every Super Bowl, McDonald’s is following suit. Neil Saunders, managing director of GlobalData Retail, argues that “on the sales side, a lot comes down to menu innovation” and although McDonald’s is concisely working on this, industry rivals “still have an edge at putting out interesting and attention-grabbing season selections. McDonald’s needs to get better at this.”
McDonald’s officials have yet to officially release the new item offerings for their revamped breakfast menu, but the food will need to be pretty incredible to inspire consumers and investors, alike, to take a visit to the golden arches.
