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Commentary: McDonald's won the recession, but will it survive the recovery?
August 12, 2009
Industry forecasters are saying that the recession is most likely over, and Slate Moneybox commentator Daniel Gross says McDonald's is one of the recession's great winners. While many restaurants scaled back, the chain opened nearly 600 stores in 2008. And the company has notched same-store-sales growth in each of 2009's first seven months.
In contrast, most other major quick-service chains have reported declines in same-store sales over the most recent quarter: Wendy's, Arby's, Jack in the Box, Carl's Jr. and Hardee's. Burger King has yet to post its latest results, but analysts are taking Burger King's largest franchisee Carrols Restaurant Group's drop in comps as an indicator of the chain's results.
Gross said McDonald's won the recession as consumers reversed the previous trend for more expensive goods and began trading down. McDonald's attracted consumers with bargains, coupons and marketing of its higher-margin products to capture consumers trading down from casual dining. But the company also has done well abroad, where the chain is seen in many countries as an aspirational brand.
From Slate:
"The question now for investors is whether McDonald's can survive the recovery. When people feel more flush, will they still stop by? The growth in same-store sales in the United States has moderated a little in recent months — up only 2.6 percent in the United States inJulycompared with 6.1 percent inApril. And there's a rising chunk of the population that has grown accustomed to eating healthier and better; my 10-year-old won't touch a McDonald's burger. Going forward, McDonald's may face larger cultural barriers in the United States than in China."
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