In Europe, McDonald’s has been promoting cost effective products, but the alarmingly high rate of youth unemployment is proving difficult to cope up with. Complementing premium products with value products did result in a boost of sales in France, however, the problems in Germany still prevails.
Company plans to increase its global outlets, which resonate with its cardinal aim of achieving long term success. This strategy is supported by the fact that McDonald’s plans to set up around 1,200 to 1,300 new outlets. To achieve this target, company has allocated a budget of $3 billion in the current fiscal year.
Threats from its rivals
McDonald’s, though trying to fortify its place as the favorite fast food restaurant amongst the people, but a few companies seems to threaten the plan. Which are those companies? Let’s have a look.
The spread of avian flu left a deep scar on Yum! Brands, Inc. (NYSE:YUM), but the company is hell bent of its path of recovery. As the media coverage surrounding the news of avian flu is phasing out, the company is stern on its strategy of establishing around 700 KFC units in China, to compensate the aftermath of the catastrophic event. The company also plans on opening around 125 Pizza Hut restaurants in the U.S.A., while the development in the Indian market is also gathering a steady pace.
With an initiative of sustained periodic growth for a longer tenure, Burger King Worldwide Inc (NYSE:BKW) has adopted a policy of increasing its franchisee network around the globe. The prime focus of the company is to build a prominent brand image and embark its dominance among its rivals. This will also help the company to reduce its overheads phenomenally.
Apart from these implementations, both Yum! Brands, Inc. (NYSE:YUM) and Burger King Worldwide Inc (NYSE:BKW) are intensifying their marketing campaign and are stressing on making economical food options available for their consumers.
Final words
Considering the above facts and figures, my perception for McDonald’s is a snail-like growth in the current fiscal year. Even in these tight economic and adverse conditions, it is one of the few companies that has posted a profit but, in my opinion, investing in the company before the European economy recovers won’t be considered a “Happy Deal.”
Ayush Singh has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s. Ayush is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Is This Stock a “Happy Deal”? originally appeared on Fool.com is written by Ayush Singh.
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