McDonald's customers changed their behavior during pandemic, but some trends could endure
Of McDonald's down a little bit today. Despite the fact, same store sales in the second quarter only down two point three percent. That's better than what we have been seeing from a lot of big restaurant companies out there. And Jason similar to the comments that we got from Coca Cola's CEO. Chris Kempinski saying he thinks this quarter represents bottom for McDonald's. Do you think he's right? Yeah. That's a it's an interesting perspective to hear from him, and actually think in McDonald's case could be right. I mean I think. When you look at this quarter when you look at. These? Numbers look pretty darn good. All things considered I. Mean I think that what we're going to see. As as discerning season rolls out, it's it's going to be the expenses that really separate the kids from the grownups here eventually, they're going to be companies that can deal with the with the ramp up in costs due to the pandemic. Way better than others. The McDonald's is one that is going to be able to deal that I think pretty pretty pretty good fashion, I mean it's obviously a huge concept. I mean being franchise means. You've got a lot of partners out there with a lot of expertise in their particular geographies. I don't think you can dismiss that I don't think you can discount that interviews remember not all that long ago. starbucks actually pivoted in their strategy. Going away from company owned stores in foreign markets to back to licensed stores. Because they wanted to rely on that expertise that boots on the ground. Expertise that locals have in McDonald's has that, too, so I mean I think that. This is a company that's going to always benefit from this move towards. Contactless drive-thrus. Always a part of the concept for the most part, and then they've certainly noted that. I think it's very. Interesting to note how dependent they are in some markets, though on their dining room segment, and if you look at their international operated market segment, which is a a large piece of the business pre Kovic, nearly seventy percent of customer orders were in restaurant across those larger markets when they close those dining rooms. Even for a limited time. It makes a big deal. It makes a big. Big Impact on on their financials even though they have the drive through to fall back on, so it's not all sunshine and lollipops, but given the situation. This is a restaurant company that's going to be able to deal a lot better than most well. You talked about the expenses, and that was one of the things Kim Ski was talking about on the call just sort of. In particularly their marketing how they have pulled back on the marketing, spend rightly so, but he was talking about it almost in the same way that Warren Buffet talks about his elephant gun. Like Hey, we've. We've cut back on marketing over the past four months or so. We think as our operations rebound in the second half of this year. We're going to be able to ramp up our marketing to a degree that we have in for a while. I'm assuming at least part of that would be aimed at first because. That was one of the things I was reminded of with. This report is. McDonald's, needs breakfast to be successful. They do you're right and I'm glad you mentioned breakfast because that's that's where I was going to go with this as well. They make Donald's. They don't need to mark it as much as others. Maybe I mean. It's obviously very well known brand already. With large presence at their, in despite the fact that they have recovered a lot of lost sales, like in other words, the the the the fall off in June, for example they've recovered essentially ninety percent of their two thousand nineteen tales from junior. The things are looking a lot better than they were just a few months ago, but that is the one sore point. I think for them. His breakfast in. It's not just. People aren't eating breakfast for dinner or lunch as much anymore. It's this idea that a lot of just aren't commuting anymore and so they're not selling breakfast for breakfast. And that that is a bit of a problem because McDonald's. You know I'm not the biggest. McDonald's in the world, but if if I had to go for for one meal I think it would probably be breakfast, they do it pretty well. And they're just that. That's fallen off a cliff, and that's not gonNA. Come back as quickly even though they had that lever to pull in serving breakfast brilliant essentially as long as they want. But, you know what that's. It I mean I it'll be. It'll be a slow recovery. It's it's. I don't want to say it's going to be a lost year, but it's GonNa, be, there's there's going to be a lot of growth that is lost this year, but but again I think McDonald's a company, and in a very admirable position they will be able to play offense while a lot of other companies were playing defense in that ultimately I think a workout well in their favor.