McDonald's Revamps Value Strategy as Sales Growth Slows

McDonald's is struggling to convince customers that its menu represents value, according to trader Mike Khouw. The fast-food chain recently announced a revised US value strategy after recording its slowest sales growth in over a year.

The company plans to introduce temporary menu items, national digital promotions, and personalized offers for loyalty members as part of its 'bridge plan'. However, recreating the iconic 'Dollar Menu' from 20 years ago is nearly impossible due to rising food and labor costs.

According to a UBS study, the percentage of US consumers who regard McDonald's as a good value fell from around 55% in 2020 to about 40% in 2024. Comparable sales rose only 0.8% in the second quarter, while spending by households earning under $40,000 declined 2.4%.

Despite these challenges, McDonald's shares have remained relatively stable over the past five years, with a slight increase from around $242.50 to $248.50. However, the business itself has improved, with projected 2026 revenue exceeding $28.2 billion and estimated net income rising to roughly $9.15 billion.

The company's share count has declined about 5.25%, resulting in a more concentrated ownership structure. This has led to a lower forward multiple of around 19.2 times, making McDonald's shares relatively attractive compared to other stocks.