McDonald's Co., Ltd. MCD has set new growth targets to further advance its “Accelerate Arch” strategy.
The company aims to continuously strengthen its brand image, expand its global footprint and build its digital ecosystem, and shares its optimistic views on the growth trajectory set. These aspects give McDonald's an unparalleled competitive advantage and place the company in a strong position in an uncertain economy.
Formulation of growth strategy
McDonald's “Accelerate the Arch” strategy integrates the company's core growth pillars, including maximizing marketing, focusing on the core, 4D, delivery, digital, drive-thru and doubling down on development (2023 included at the beginning of the year).
With its commitment to its core pillars, the company aims to implement the Best Burger initiative in all of its markets by 2026. Additionally, the company plans to offer McCrispies in nearly all markets by 2025, expanding menu items to include wraps and tenders. This target has been set against the backdrop of the growing demand share of the chicken category.
Under the Digital Category's 4D Pillar Double Down, McDonald's aims to deliver approximately $45 billion in system-wide annual revenue to loyalty members by 2027, while increasing its active loyalty user base to 150 million 90-day active users. The plan is to increase the number of people from 10,000 to 250 million. The company also plans to expand its Ready Onrrival pilot in the U.S. to the top six markets by 2025.
In the delivery sector, the company wants to capitalize on mobile app launches in the top five markets and expects 30% of delivery orders to be mobile apps by 2027. In the development category, the company plans to open more restaurants. It is expected that 50,000 restaurants will open by the end of 2027.
Focused on advanced technology-driven solutions, McDonald's entered into a strategic partnership with Google Cloud on December 6, 2023 to apply the latest cloud technology and generative AI solutions to all restaurants worldwide . This move will help the company drive automation innovation and accelerate solutions that effectively detect issues and reduce business interruptions. Additionally, from the beginning of 2024, the company will begin rolling out new universal software on which all customer and restaurant digital platforms will run.
Market presence drives growth
McDonald's products have reached $1 billion brand status through sustained product innovation and geographic expansion. The brand awareness enabled the company to get good results with his Arches campaign strategy, especially the Arches acceleration launched in top markets around the world, driving growth.
Successful execution of the Accelerated the Arches strategy has increased customer demand and increased market share across key markets. The company's performance reflects McDonald's system-wide passion and dedication, with global comparable sales reaching 8.8% and consistent segment performance, which reflects the strength of the brand. is showing.
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Shares of the fast food chain have gained 5% over the past year, outpacing the Zacks Retail – Restaurant industry's 1.5% growth.
With its focus on digital initiatives, campaigns, and loyalty programs, the company remains optimistic and expects initiatives to increase sales and average checks in the coming period.
McDonald's has released preliminary guidance for 2024, expecting restaurant net sales growth to be close to 2% of systemwide sales growth (excluding currency). Operating margins are expected to be in the mid-to-high 40% and new restaurant net growth rates are expected to be over 4%.
Zacks Rank and Top Picks
McDonald's currently carries a Zacks Rank #3 (Hold).
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