Cramer Sees Opportunity in Struggling McDonald's

Jim Cramer believes McDonald's is a buy opportunity after its recent 24% decline. He thinks the company's transformation plan, called NEXT, will help it regain its footing. The plan includes approximately $8.5 billion of support for franchisees through 2036, including about $5 billion by 2030.

Cramer says this support is necessary because McDonald's relies heavily on independent franchisees to implement changes. He notes that the company has been slow to adapt in areas such as value and technology. McDonald's pulled back digital offers and only 60-65% of US systems followed the recommended pricing structure for its under-$3 menu.

The company is now emphasizing digital offers, meal bundles, and simpler promotions. It's also using AI to help determine when and where to lower prices. This could free up labor hours at each location and reduce food waste by 15%.

Cramer thinks McDonald's is trading at a discount from its historical value. The company trades at approximately 17x forward earnings, compared to about 21 times for Yum! Brands. Historically, McDonald's tended to trade in the mid-20s, so Cramer sees this as an opportunity.