Call it the chicken revolution, but fast-food chains are betting on poultry to win back customers, and McDonald‘s (MCD 0.21%) won’t be left behind. The iconic hamburger chain is upgrading its brand with new chicken offerings, including bone-in wings, as well as refreshed beverage options and restaurants, to compete with fast-casual rivals.
McDonald’s new growth strategy is called McDonald’s > NEXT, with a main focus on higher-quality food and drink items, restaurant redesigns, and improved customer experience.
Is this a gimmick investors should ignore, or can the Golden Arches win again in a challenging consumer environment?
Today’s Change
(-0.21%) $-0.57
Current Price
$272.72
Key Data Points
Market Cap
$194B
Day’s Range
$271.85 – $278.50
52wk Range
$271.85 – $341.75
Volume
3.6K
Avg Vol
3.6M
Gross Margin
57.31%
Dividend Yield
2.70%
The fast-food company not only wants to differentiate itself but is also emphasizing the challenging consumer environment, where discretionary dollars are limited. Consumers expect more for their money, and the McDonald’s > NEXT strategy aims to address this by offering value deals and enhanced hospitality.
McDonald’s is taking a necessary and calculated risk with its reimagining of the fast-food experience. An upgraded menu could put pressure on the company’s margins, as premium ingredients cost more. Still, the long-term return on investment could be substantial if hungry consumers consistently choose McDonald’s over rivals such as Starbucks or Chipotle.
Image source: Getty Images.
There is always a risk that new menu items or restaurant redesigns could be complete misses. If the chicken items fall short of the standards set by Raising Cane’s or Chick-fil-A, consumers won’t waste valuable dollars on subpar items. The strategy depends entirely on whether McDonald’s can deliver on value and taste.
Should investors bite?
Shares of McDonald’s are down 9% this year and are trading at a reasonable price. McDonald’s stock has underperformed over the past five years so that a successful growth strategy could reinvigorate the 86-year-old American institution.
The stock’s trailing P/E ratio is currently below 23, and with a quarterly dividend of $1.86 per share, McDonald’s investors could see renewed growth alongside solid income.
New items will be tested in a limited number of stores before being rolled out more widely. This gives McDonald’s a real opportunity to get its recipes for food and growth right. Long-term, I think this new focus is just what the brand needs.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald’s, short January 2028 $340 calls on McDonald’s, and short June 2026 $36 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
