MCD financial performance has been miserable in the last year. It is doing poorly in all areas. Now they want to sell coffee and compete with STARBUCKS. People don't buy coffee from SB because it is cheap. They buy it because it is a cool and hip place to have coffee. MCD will fail in that competition and will lose its concentration in its burger business. When they say we want to sell coffee, it means that we are doing poorly in selling our burgers. Market is rallying and MCD is going in the other direction. Time to short MCD or buy some PUTs I believe.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
MCD: I want to sell coffee means I cannot sell my burgers
- Thread starter hajimow
- Start date
Quote from hajimow:
MCD financial performance has been miserable in the last year. It is doing poorly in all areas. Now they want to sell coffee and compete with STARBUCKS. People don't buy coffee from SB because it is cheap. They buy it because it is a cool and hip place to have coffee. MCD will fail in that competition and will lose its concentration in its burger business. When they say we want to sell coffee, it means that we are doing poorly in selling our burgers. Market is rallying and MCD is going in the other direction. Time to short MCD or buy some PUTs I believe.
MCD has been trying to sell premium coffee for years. The McCafe menu is nothing new.
Dead money long or short. A billion in float means it's a $96B mcap. You think it's expensive here? I dunno, but there must be 1000 other and better opps to trade. Don Thompson (CEO) is a joke and it's rumored that Dan Loeb is building a position and wants to seek his ouster, but the board is firmly behind Don Thompson.
Quote from PlinytheTrader:
MCD has been trying to sell premium coffee for years. The McCafe menu is nothing new.
Go and get a medium MCD coffee (not small) and they will charge you over $2. Tall coffee in SB is 1.75. (In California). So why should I buy my coffee from a greasy restaurant compared to more hippy place like SB?
Quote from hajimow:
Go and get a medium MCD coffee (not small) and they will charge you over $2. Tall coffee in SB is 1.75. (In California). So why should I buy my coffee from a greasy restaurant compared to more hippy place like SB?
Yeah, I don't assume that it's a destination offering (McCafe), but a high-margin item to bring in more of the breakfast crowd, to supplement the regular menu. I don't think they're delusional enough to believe that they're competing with SBUX. They had toyed with the idea of a "store within a store" concept for the McCafe, but it was dumped, so they know it's not a competitive offering.
MCDs problem is that the food is terrible and overpriced relative to other FF outlets. I do think they'll get a bump in revs over the Winter due to coffee sales. IOW, it will probably be a mild boost to revs.
Even my kids avoid MCD. Recall when you were in your teens and how much of that crap you ate (I know I did).
Quote from hajimow:
Go and get a medium MCD coffee (not small) and they will charge you over $2. Tall coffee in SB is 1.75. (In California). So why should I buy my coffee from a greasy restaurant compared to more hippy place like SB?
All I was saying is that their premium coffee strategy has been in place for quite awhile, so it's hard to cite that as a cause for their lack of performance lately. McDonald's introduced the McCafe line back in 2008, and since then their stock price has almost doubled. I wouldn't attribute that increase in stock price to their new coffee line, just like I wouldn't see it as the cause for poor performance now. MCD has been and always will be a food company, so if they are struggling its because they aren't selling enough burgers not poor coffee sales.
I want to sell coffee means the profit margin is huge on coffee.
If they could sell quality coffee and remove their name from the cup, then DD/SB could bite the dust.
If they could sell quality coffee and remove their name from the cup, then DD/SB could bite the dust.
Quote from hajimow:
MCD financial performance has been miserable in the last year. It is doing poorly in all areas. Now they want to sell coffee and compete with STARBUCKS. People don't buy coffee from SB because it is cheap. They buy it because it is a cool and hip place to have coffee. MCD will fail in that competition and will lose its concentration in its burger business. When they say we want to sell coffee, it means that we are doing poorly in selling our burgers. Market is rallying and MCD is going in the other direction. Time to short MCD or buy some PUTs I believe.
That's questionable logic. McD is already the largest fast food chain in the world - it's vertical growth options are limited, as is the case for most other large companies that dominate their market.
They are not going anywhere because they are effectively at the top of the hill, however they do have the option to experiment with different things. Their coffee and smoothie additions are not really an example of branching out - more like improving their menu so that they continue maintaining their position.
If the stock dips it's likely due to investors looking for more lucrative opportunities and not because McD is doing something wrong business-wise.
I think they should look into automated food kiosks in busy areas - think redbox, but instead of movies it serves McD food. You know the kiosks won't be demanding $15 bucks an hour for serving up pre-made burgers.