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Anticipation Mounts as McDonald’s Investor Day Approaches

Investors worldwide turn their attention to McDonald’s as the fast-food giant gears up for its highly anticipated Investor Day on Wednesday. With CEO Chris Kempczinski at the helm, the Chicago-based company is set to address a myriad of topics, providing updates and insights that will shape its trajectory in the coming years.

As the clock ticks toward 10:30 a.m. Eastern, analysts and stakeholders eagerly await revelations on various fronts. One focal point likely to dominate discussions is McDonald’s ambitious plan to boost unit growth. With over 38,000 locations globally, including 13,500 in America, the company aims to add 3.5%-4.0% net store growth in 2023. Analysts, including Greg Francfort from Guggenheim Securities, see this as a pivotal move, signaling a shift from reinvesting in store image to new development.

Unveiling “Fourth D Development”

In October, Kempczinski hinted at unveiling “more details” about McDonald’s plans related to “Fourth D development.” Part of the Accelerating the Arches initiative, the “Fourth D” focuses on restaurant development, aiming to capitalize on increased demand for McDonald’s food. This includes testing concepts like the upcoming CosMc’s, a small-format concept with its own unique personality.

Guggenheim Securities will be closely monitoring comments on CosMc’s brand and expansion plans, particularly in relation to competitors like SBUX and BROS. The unique spinoff is set to undergo trials in 2024, with one location slated for Bolingbrook, Illinois.

Navigating Wage Changes

The recent implementation of AB 1228 in California, raising the minimum wage for fast-food workers to $20 per hour, may prompt discussions on how McDonald’s plans to navigate these changes. Kempczinski acknowledged potential wage impacts for California franchisees and expressed confidence in McDonald’s ability to weather the challenges, potentially gaining market share in the process.

Digital Strategies Take Center Stage

With digital sales contributing over 40% of systemwide sales in the third quarter, McDonald’s is expected to shed light on its efforts to elevate digital strategies. The company boasts over 57 million 90-day active members within its top six markets, emphasizing the increasing importance of digital channels in its overall business strategy.

Outlook on Reorganization and Future Metrics

Investor Day may also provide insights into the progress of McDonald’s reorganization efforts initiated earlier in the year. The company, aiming for greater collaboration, undertook headcount reductions to foster a unified approach to problem-solving. Additionally, stakeholders anticipate McDonald’s outlook on performance metrics for 2024 and 2025, with projections of mid-single-digit system-sales growth, high-40s EBIT margins, and a disciplined General and Administrative plan at ~2.2% of system-sales.

As the fast-food giant steps into the spotlight, the financial world eagerly awaits the revelations that will shape McDonald’s future course and influence investment decisions globally.

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