McDonald's Faces 30% Stock Drop, Seeks to Reverse High Prices

McDonald's (MCDC34) stock has fallen nearly 31% since its February peak, mirroring the perception that its menu has become too expensive, driving away value-conscious customers. The fast-food chain projected "slightly negative" sales in the United States for the current quarter, while last quarter's sales rose just 0.8% – the slowest pace in over a year.

Consumer Reaction to Price Increases

Consumers are complaining about high prices and changes to the in-store experience, such as the removal of children's play areas. The Big Mac Index from The Economist indicates that the sandwich's price in the U.S. rose approximately 23% between 2019 and the end of 2025. McDonald's began raising menu prices after the pandemic to offset surging costs for ingredients, wages, and fuel.

Multi-year $8.5 Billion Plan for Franchisees

The "Next" plan allocates approximately $8.5 billion to help franchisees improve food quality, customer service, and restaurant management by 2036. The investment combines financial support and rent reduction, aiming to accelerate modernization, implement technology, and enhance kitchen efficiency.

Franchisee Challenges and Competition

Nearly 95% of restaurants are franchised, and about one-third have not followed pricing guidelines. Competition from brands like Burger King and Taco Bell, which reported sales increases of 8.5% and 7% respectively, intensifies pressure on McDonald's. The chain also faces strong competition from emerging brands focused on chicken and beverages.

Renovations and Technology as a Response

McDonald's plans to revitalize PlayPlaces and redesign stores to be more open, as well as bringing back playful elements lost in previous renovations. The initiative includes testing generative AI (ArchIQ) and automated drive-thru service, aiming to improve efficiency and the customer experience.

Market Outlook and Wall Street Assessment

Despite the difficulties, Wall Street maintains a majority of "buy" recommendations. McDonald's shares are trading well below their five-year average valuation, at approximately 17 times projected future earnings. The average price target implies a 28% return from Friday's close. The expectation is that the changes will take at least a year to yield significant results.

With information from InfoMoney, Bloomberg Línea Brasil.