Despite same-store sales growth internationally, McDonald’s U.S. growth missed expectation. So, what what could bring customers back? A recession.
“I think that companies like McDonald's, stocks like McDonald's, are somewhat recession proof,” Bruderman Asset Management Chief Market Strategist Oliver Pursche told Yahoo Finance’s On the Move. “As we talk about a global slowdown, as we talk about a slowdown in the US economy, those lower priced item menus tend to do well for them.”
The rough quarter for McDonald’s comes as competition intensifies in the fast-food space, with brands like Wendy’s (WEN) turning to things like breakfast to try and lure customers.
“Wendy's is doing a great job at reinventing itself and bringing up sales there. So the competition is heating up,” says Pursche. “At some point or another, any smart investor or portfolio manager is going to have to look at that and see whether that change is a thesis of why you own the stock.”
Pursche says, it’s the latter they should be worried about. “A Popeye's sandwich is a short term phenomena that's yet to be proven whether that's an impact in consumer behavior. The Meatless Burger is clearly the beginning of a change in taste and consumer behavior. And so that can have an impact. So that part we would be much more concerned about than say, a promotion, that gets a lot of press.”
Kenneth Underwood is a senior producer for Yahoo Finance. Follow him on Twitter @TheKennyU.