McDonald's has 1 shot to turn around its dreadful year

McDonald's stock could be on the brink of a rebound if the company can turn its fortunes around in the coming months. The fast-food giant is set to address its recent struggles during its investor day in Chicago on September 23. Analyst Andy Barish believes that McDonald's management needs to present a clear plan to boost same-store sales, protect and grow operating margins, and maintain unit growth despite the challenging economic climate.

The past year has been a tough one for McDonald's, with its stock price plummeting by 18%. The company's comparable sales have lagged behind those of Restaurant Brands International-owned Burger King US, which saw an impressive 8.5% year-over-year increase. McDonald's initiated several new strategies this year, including a new McValue menu, six new drinks, and a nationwide rollout of Red Bull Dragonberry Energizer. However, these efforts have yet to yield the anticipated sales growth in the second quarter.

McDonald's executives are hoping the investor day will provide the much-needed clarity and reassurance to investors regarding the company's long-term growth potential. They expect to see improvements in marketing and menu innovation, as well as franchisee pricing and participation in promotions. However, addressing these issues may take longer, and McDonald's will need to provide updates on their discussions with franchisees in the coming week.

Barish also highlights the growing awareness of McDonald's new premium beverages, digital/delivery options, and e-commerce delivery as providing a steady floor for the company's performance. With a final chance to right the ship, McDonald's must convince investors that the recent setbacks can be overcome and that the long-term outlook remains positive.