McDonald's investor day in Chicago

McDonald's is expected to share details about its new growth strategy at an investor day on Wednesday in Chicago. The company unveiled the plan, called McDonald's > NEXT, in June at its biennial worldwide convention for franchisees.

U.S. sales disappoint in latest quarter

The investor day comes after McDonald's U.S. business disappointed in its most recent quarter. Same-store sales increased just zero point eight percent, and traffic to its restaurants fell.

CEO blames execution, not strategy

CEO Chris Kempczinski said the problems were due to shortcomings in execution, like mixed implementation of value offerings, rather than issues with the chain's overall strategy.

Stock falls as investors grow skeptical

Over the past twelve months, McDonald's stock has fallen eighteen percent, dragging its market value down to about one hundred seventy five billion dollars. The S and P five hundred has climbed sixteen percent in the same period.

Value offerings lost in messaging

McDonald's has struggled as its value offerings got lost among other promotional messages. Only about two thirds of McDonald's U.S. franchisees implemented its recent under three dollar menu, executives said in August.

Franchisees resist discount pressure

Franchisees have pushed back against discounts, which grow sales but eat into operators' profits, especially as high beef prices raise expenses. Citi Research analyst Jon Tower cut his price target to three hundred ten dollars per share from three hundred forty five dollars.

“We expect MCD to use this event to make it clear to franchisees that adherence to pricing recommendations will be a key factor in evaluating agreement renewals.”

Hand-breaded chicken and new drinks

McDonald's is shifting its menu to include more chicken options as beef prices have risen. The next evolution will be hand-breaded chicken. The company has also rolled out crafted sodas, refreshers and energy drinks in the U.S.

“What's important, we'll talk a lot more about this at investor day, is beverages.”

Restaurant remodels and rising costs

McDonald's is mandating another round of restaurant renovations as part of its growth strategy. Capital expenditures could increase by six hundred million to nine hundred million dollars in twenty twenty seven and twenty twenty eight from projected twenty twenty six spending.

Cost cuts and refranchising plans

McDonald's will share its outlook for general and administrative spending at investor day. The company could target G and A spending to be less than two percent of systemwide sales, down from its current goal of two point two percent.

Refranchising to cut operational costs

McDonald's will also cut costs by refranchising some of its company-owned restaurants. Selling locations to franchisees means McDonald's will not be responsible for operational costs or capital expenditures required to run a restaurant successfully.