{"id":636533,"date":"2026-09-26T09:58:12","date_gmt":"2026-09-26T09:58:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/636533\/"},"modified":"2026-09-26T09:58:12","modified_gmt":"2026-09-26T09:58:12","slug":"mcdonalds-menu-of-chicken-and-ai-fails-to-excite-investors-as-us-diners-tighten-belts-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/636533\/","title":{"rendered":"McDonald\u2019s menu of chicken and AI fails to excite investors as US diners tighten belts \u2013 The Irish Times"},"content":{"rendered":"

Move over KFC, Popeyes and Chick-fil-A. McDonald\u2019s<\/a> wants a bigger bite of the chicken business<\/a>. <\/p>\n

Having already seen its shares plunge by 27 per cent from an all-time high in late February, the world\u2019s biggest fast-food group put chicken at the heart of a new strategy unveiled on Wednesday. McDonald\u2019s is looking to capture more of the fastest-growing segment of the quick-service restaurants market at a time when consumers are watching their spending and GLP-1 drugs are reshaping eating habits.<\/p>\n

\u201cWe are global leaders by a wide margin in beef with more than 40 per cent share in a $50 billion (\u20ac44 billion) category that is growing around 3 per cent a year. Chicken is a nearly $130 billion category, growing more than 5 per cent a year,\u201d Jill McDonald, the group\u2019s chief restaurant experience officer, said during investor day presentations. The aim is to grow its market share, now in the \u201chigh teens\u201d, by 1.5 percentage points by 2030, she said. <\/p>\n

The new strategy \u2013 dubbed Next \u2013 has earmarked $8.5 billion to help franchisees modernise restaurants over the next decade (through rent relief and capital supports). It has also targeted a greater market share in beverages, and eyes a scaling of AI<\/a> to automate routine tasks like drive-through ordering.<\/p>\n

Investors, however, aren\u2019t nibbling, with McDonald\u2019s shares extending their losses in recent days. It brings the decline over the past seven months to 34 per cent. They are also the second-worst-performing shares on the Dow Jones Industrial Average index so far this year, behind Nike. <\/p>\n

McDonald\u2019s price weakness has been driven mainly by slowing US same-store sales growth as consumers rein in spending as they grapple with resurging inflation. At the same time, the industry\u2019s traditional advantage \u2013 selling cheap food at high volumes with the help of relatively low running costs \u2013 has been squeezed by sharp rises in food, energy and labour costs. <\/p>\n

The average price of a Big Mac in the US has risen by a third since 2019, before the Covid-19 pandemic, according to the Big Mac Index, which was developed by The Economist 40 years ago.<\/p>\n

McDonald\u2019s same-store sales growth slowed to an annual rate of 0.8 per cent in the second quarter \u2013 pointing to an actual decline in sales volumes, after price increases to keep up with inflation. The market was actually expecting a 1.1 per cent increase that quarter, down from 3.9 per cent in the first and 6.8 per cent for the last three months of 2025. <\/p>\n

Executives conceded to analysts during the investor day presentation on Wednesday that US same-store sales would be \u201cslightly negative\u201d for the third quarter. <\/p>\n

[\u00a0The issue that keeps Simon Harris awake at nightOpens in new window<\/a>\u00a0]<\/p>\n

While the strategy sets out solid medium-term targets, Deutsche Bank analysts concluded in a report that it did little to settle a debate on when US same-store sales might reach an inflection point. <\/p>\n

Morgan Stanley analysts said investors are sceptical about the strategy as quick-service restaurants remain under pressure and the pay-off and impact of McDonald\u2019s investment programme is seen as \u201cdistant and uncertain\u201d \u2013 especially given the group\u2019s patchy execution record in recent times. Chief executive Chris Kempczinski acknowledged in August that a push on the group\u2019s new so-called value menu hadn\u2019t been delivering as much traffic from lower-income consumers as hoped. <\/p>\n

McDonald\u2019s may have to wait until it shows some sales wins from its new strategy for investors to start putting in orders for shares, said Morgan Stanley, as it reiterated its equal-weight \u2013 or neutral \u2013 stance on the stock. <\/p>\n

\u201cWe are equal-weight rated not so much because we don\u2019t find the Next plans credible or material, but more so because the time for them to work may be lengthy, and we still struggle with near-term catalysts,\u201d it said. <\/p>\n

McDonald\u2019s, the world\u2019s largest fast-food chain, is essentially a burger and fries business wrapped around a giant real-estate empire. Although 95 per cent of its 45,000 locations in more than 100 countries are franchised, the group generally owns or holds long-term leases on the premises and franchisees pay for fitout. At the end of last year, it had almost $46 billion of real-estate assets, albeit valued at cost rather than market value. <\/p>\n

McDonald\u2019s restaurants globally made $139.4 billion of system-wide sales last year. McDonald\u2019s Corporation\u2019s own revenues amounted to $26.9 billion \u2013 with 62 per cent of this coming from rent, royalties and fees paid by franchises, 36 per cent from sale of food in company-operated restaurants, and the remaining 2 per cent from the likes of technology fees and brand licensing. <\/p>\n

\"\"Should Ireland share its corporation tax bonanza with the EU?<\/p>\n

Franchisees purchase ingredients from independent suppliers that must meet the group\u2019s specifications and standards. Dawn Meats, for example, supplies the beef for every burger sold across the 95 restaurants in the Republic of Ireland, which are operated by 19 franchisees. <\/p>\n

The group\u2019s business model is largely dependent on the McDonald\u2019s offering remaining attractive to franchisees, who pay rent and royalties for the right to operate under its brand.<\/p>\n

While McDonald\u2019s expects its number of locations to rise by about 4.5 per cent for this year and next \u2013 marking its fastest period of new unit openings ever \u2013 it sees the rate slowing to as low as 3 per cent over each of the following three years. RBC Capital Markets analysts said that Wall Street had been expecting an average of 4.3 per cent annual expansion over the period. <\/p>\n

Most of the growth in outlets is expected in developing economies like China, India, Brazil and the Philippines, where average restaurant sales \u2013 and royalties flowing back to headquarters in Chicago \u2013 will be much lower than in McDonald\u2019s more mature developed markets. <\/p>\n

Back to chicken, McDonald, the group\u2019s chief restaurant experience officer (no relation to its founders), sees a plethora of opportunities \u2013 from McNuggets, which have been around for more than four decades, to tapping into the current global protein craze with \u201cgrilled chicken sandwiches and wraps\u201d. <\/p>\n

Analysts estimate that a 1.5 percentage point gain in chicken market share by 2030 would translate into 5-6 per cent growth in McDonald\u2019s total system sales over the period.<\/p>\n

But McDonald\u2019s goal will ruffle feathers in an already fiercely competitive corner of the market. Chicken specialists are unlikely to surrender share without a response.<\/p>\n","protected":false},"excerpt":{"rendered":"Move over KFC, Popeyes and Chick-fil-A. McDonald\u2019s wants a bigger bite of the chicken business. Having already seen…\n","protected":false},"author":2,"featured_media":636534,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,13355,61,60,4856,150837,80,115],"class_list":["post-636533","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-food-production","tag-ie","tag-ireland","tag-mcdonalds","tag-popeyes","tag-technology","tag-united-states"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/636533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=636533"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/636533\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/636534"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=636533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=636533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=636533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}