Shares in fast-food chain McDonald’s (MCD) were tastier today as a leading analyst said the company’s new value meals were almost impossible for their peers to replicate. However, it was also described as a ‘calculated risk.’
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Earlier this week MCD announced that it will reintroduce its Extra Value Meals starting September 8. The company noted that the deals are meant to make meals more affordable while traffic at many chains remains soft.
Financial Pinch
The options include the Sausage McMuffin with Egg, Sausage Egg and Cheese McGriddle, Egg McMuffin, and any McCrispy Sandwich. McDonald’s said the meals save customers about 15% compared with ordering items one by one. A crucial difference in a time when consumers are feeling the financial pinch.
At a dinner hosted by MCD’s chairman and chief executive Chris Kempczinski and CFO Ian Borden, it was clear that recapturing its value leadership was a key reason for making the changes.
Lauren Silberman, analyst at Deutsche Bank was present at the dinner but did not mention whether any of the new value meals were on the table. She did say though that McDonald’s management expects its “baseline traffic to offset the value investments by the first quarter of 2026.”
That would be a huge boost for the company whose sales have been under pressure over the last few years.
In layman’s terms that means more people coming into the stores offsetting the cost of the price cuts in the longer term.
Franchise Hazard
Other costs include marketing and temporarily supporting franchisees to ensure the success of these new initiatives.
“We continue to believe MCD is well positioned for outperformance and market share gains given its unmatched scale, share of voice, marketing firepower, willingness to invest and healthy franchisees, all of which enable the brand to implement efforts that would likely be near impossible for peers,” Silberman said. She has a Buy rating and a $355 price target.
Chris O’Cull of Stifel has a Hold rating and $315.76 price target. He said that the timing of the new promotions is strategic, coinciding with anticipated inflationary pressures from tariffs and back-to-school spending.
He said that the move is expected to result in lower franchise revenues in 3Q and 4Q25, but is not projected to materially impact profit guidance.
“The company did not test these changes or develop a business case beforehand, making this a calculated risk. Management also acknowledged the moral hazard of this program—franchisees becoming reliant on corporate support if their pricing diverges from consumer expectations,” O’Cull said.
Is MCD a Good Stock to Buy Now?
On TipRanks, MCD has a Moderate Buy consensus based on 14 Buy, 13 Hold and 2 Sell ratings. Its highest price target is $373. MCD stock’s consensus price target is $329.73, implying a 4.18% upside.
