McDonald's Expanding and Innovating

McDonald's Corp. Shows Continued Growth

McDonald’s Corp. is proving its dominance in the fast-food industry, according to a J.P. Morgan Chase analyst. The iconic chain announced on Wednesday its plans to open 10,000 new stores in the next four years, bringing its total count to an impressive 50,000. This ambitious expansion is an exciting part of McDonald's long-term strategy, which was presented during its recent investor day.

A Focus on Quality and Innovation

As part of its plan to provide customers with the "best burger" experience, McDonald's will be introducing various improvements such as a brioche bun, fresher and meltier toppings, and perfectly seared patties. These changes will be rolled out in 70 markets by 2024. However, it's not just burgers that are in the spotlight. Chicken has become a rising star on McDonald's menu, captivating customers around the world.

Chicken: Stealing the Spotlight

J.P. Morgan analyst John Ivankoe acknowledges the growing popularity of chicken dishes at McDonald's. In fact, he believes that chicken is now stealing the show. Ivankoe maintains an overweight rating on the stock and has increased his price target to $300 million, up from $278 million. With chicken accounting for approximately $25 billion in systemwide sales, it has now reached parity with beef. The annual sales of Chicken McNuggets alone have surpassed $10 billion and have consistently grown by about 10% each year since 2019.

The Global Chicken Market

In addition to its success within McDonald's, chicken has a tremendous presence in the global market. Ivankoe points out that the chicken market is estimated to be twice the size of the beef market. This further highlights the immense potential for continued growth and opportunity for McDonald's in the coming years.

McDonald's Corp. has exciting plans in motion to solidify its position as a leader in the fast-food industry. With a strategic focus on innovation, quality, and the rising popularity of chicken dishes, McDonald's is poised for continued success.

McDonald's Plans to Increase Capital Spending

According to J.P. Morgan analyst Ivankoe, McDonald's is set to increase its capital spending in the coming years. Previously running at a "slow" rate of $2 billion, the company plans to ramp it up to $3 billion in fiscal 2025, with further increases expected in subsequent years. By 2027 and beyond, the capital spending may reach a plateau close to $4 billion.

Ivankoe states that McDonald's showcases its ability to grow bigger, referring to the company's plans.

In premarket trading on Thursday, McDonald's stock experienced a slight increase of 0.1%. So far in 2023, the stock has gained approximately 8.7%, slightly trailing behind the Dow Jones Industrial Average DJIA, which has seen a 9% increase.

Shake Shack Receives Upgrade from Raymond James Analyst

Following a meeting with investors on Monday, Shake Shack has been upgraded to a strong buy by Raymond James analyst Brian Vaccaro. Vaccaro has set a price target of $78 for the burger chain.

In his research note, Vaccaro highlights two main reasons for the upgrade. Firstly, he believes that Shake Shack is still in the early stages of improving margins and reducing development costs. Secondly, he sees potential opportunities in 2024 that could further boost margins and increase customer traffic, potentially surpassing the expectations for that year.

As a result of this upgrade, Shake Shack's stock has surged by 51% in 2023, outperforming the S&P 500 SPX, which has recorded a 19.1% increase.

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