McDonald’s investor day: What to expect

McDonald’s is expected to share new details about its accelerated expansion plans, a new spinoff brand called CosMc’s and digital strategy at its investor day on Wednesday.

At its last investor presentation three years ago, McDonald’s rolled out a strategy that planned to grow sales by improving and marketing its core menu items, launching a loyalty program, and leaning into chicken and coffee. The company also projected mid-single-digit sales growth in 2021 and 2022.

Wall Street analysts aren’t expecting any major shifts in strategy, but they are predicting that McDonald’s will release another near-term forecast for sales growth and new unit development during Wednesday’s presentation.

However, the company’s predictions may be conservative, given business leaders’ and experts’ worries about the economy. Although inflation has cooled, consumers are still watching their wallets. Fast-food chains like McDonald’s typically outperform the broader restaurant industry during economic downturns.

McDonald’s stock has risen about 8% this year, trailing the S&P 500’s 19% gains. Shares of the company, which has a market value of about $207 billion, have struggled as investors worry about sales potentially weakening because of the economy and weight loss drugs.

Here’s what McDonald’s will likely address during its investor day:

Earlier this year, the company announced it would be refocusing its priorities and accelerating restaurant expansion. Tied to that announcement, McDonald’s reorganized its corporate structure and laid off hundreds of workers.

CEO Chris Kempczinski said the restructuring was needed to streamline the organization and avoid silos. But since then, the company has shared relatively little information about how the restructuring will affect its decision-making and broader business.

Before the Covid pandemic, McDonald’s priorities for its U.S. stores dealt with remodels and store upgrades, like self-order kiosks. Then came lockdowns and a massive shift in how diners bought and ate their food. While some customers have returned to McDonald’s dining rooms, many others have maintained their new habits, like ordering on the McDonald’s app.  

The chain has already announced some small tweaks coming to U.S. restaurants. For example, it’s phasing out self-serve soda stations, which allowed customers to refill their soft drinks.

But McDonald’s also seems to have bigger plans in mind. The chain has already said it wants to accelerate its restaurant development in the U.S. to meet today’s higher demand for its Big Macs and McNuggets.

While the U.S. may seem saturated with McDonald’s locations, executives have said that its current footprint doesn’t reflect where consumers currently live, including the shift to the South and Southeast.

“Our footprint reflects what the population looked like probably 20 or 30 years ago,” Kempczinski said on the company’s conference call in July.

The chain is now also ready to experiment with fresh restaurant formats and features for those new locations. It opened a location in Texas that’s mostly automated. Executives have teased the launch of CosMc’s, a spinoff brand of small-format locations inspired by an old McDonaldland character. Some McDonald’s locations have also tested using artificial intelligence to take drive-thru orders.

McDonald’s plans to accelerate growth also include building more locations in its international operated markets, a segment that includes Canada, Germany, Australia and France. Kempczinski said in July that the growth in those markets has been “pretty anemic” compared with the opportunity available.  

McDonald’s also recently bought back a minority stake in its China business for a reported $1.8 billion. China is now the company’s second-largest market by number of locations, but investors will be looking for more on why McDonald’s did the deal and management’s long-term hopes for the market.

McDonald’s operates roughly 5% of its U.S. restaurants, giving the company little insight about who its customers are and what they want. But its growing digital business, from self-order kiosks to its mobile app, has given the company more access to its franchisees’ customer bases.

Take its loyalty program, for example. McDonald’s hadn’t launched its loyalty program nationwide at the time of its last investor day. Since then, the chain has shared some comments on the program, including that it drives a 15% increase in visits from members. But investors are eager to hear more about what McDonald’s has learned about its customers, how it plans to implement those takeaways and what other digital innovations could unlock.

Don’t miss these stories from CNBC PRO: