Will all-day breakfast power-up McDonald’s earnings?

Andy Uhler Jan 22, 2016
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Will all-day breakfast power-up McDonald’s earnings?

Andy Uhler Jan 22, 2016
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In October, McDonald’s reported that sales in the U.S. rose for the first time in two years. On Monday the company reports earnings for this quarter, the first in which its breakfast-all-day strategy has been fully in place.

Let’s be clear — struggling sales over the last few years weren’t going to bankrupt McDonald’s. Kevin Burke, managing director at Trinity Capital, said that may have been part of the problem.

“I think this company was snoozing a little bit over the last five or six years,” Burke said. “Because as gen X, Y, and Z have decisively moved to different brands, they’ve been kind of slow to adopt to the things that they want.”

Burke said the things young Americans want are hipper marketing strategies. They don’t want to see commercials with Ronald McDonald.

But what about the menu?

Alex Susskind, professor of food and beverage management at Cornell University, said McDonald’s doesn’t need to get too cute with the food. 

“You want broccoli? You can have broccoli at home,” he said. “They just needed to get back to the basics.”

Basics like burgers and fries and now breakfast all day, which was a move that angered some franchisees.

Nicole Miller Regan, senior research analyst at Piper Jaffray, said even that was strategic. 

“Easterbrook, the current CEO, has done a great job of getting back kind of a healthy tension in the relationship between corporate and the franchisees,” she said.

 A healthy tension investors hope will bring more sales to the golden arches. 

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