Golden Arches ... Golden Opportunity
McDonald’s New Menu: Automation, Data, Innovation and Expansion
Mickey D’s … the Golden Arches … Ronald McDonald … the Grimace … the Hamburglar … the “two all beef patties, special sauce” Big Mac jingle …
McDonald’s Corp. (MCD) isn’t just a fast-food chain. It’s an American corporate icon. One that’s part of our pop culture. And a part of our personal histories.
I say all that because I’m betting most of you folks pursuing this also know at least some of the Mickey D’s “origin story.”
Two California brothers launched the company in 1940, as a single restaurant with a carhop drive-in system and a menu that featured barbeque. But when brothers Richard “Dick” McDonald and Maurice “Mac” McDonald realized that customers loved their hamburgers, the company that began as “McDonald’s Famous Barbeque” focused its entire business on the beef patty housed in a bun.
A franchising strategy and an entrepreneur named Ray Kroc ignited a historic growth story.
Today, those Golden Arches are as iconic as McDonald’s Big Mac hamburgers and golden French fries. The hamburger chain has filled America's bellies through wars, social and political turmoil, and economic and competitive challenges. It beat back each of those challenges — and grew from a distinctly U.S. brand into a leading global one, emerging as a company whose market value is roughly equal to the GDP of Greece.
Throughout its history — as eating habits changed, competition surged and inflation came and went (and came again) — gloom-and-doomers penned McDonald’s epitaph over and over again.
And the company just kept responding.
Over and over.
Here today, McDonald’s faces a whole slew of new challenges — tests that demand a corporate-wide transformation. The fast-food Cassandras are back. And those Golden Arches epitaphs are flowing again.
Mickey D’s can’t rest on its laurels ... or let down its guard.
But don’t worry.
It isn’t.
In fact, Mickey D’s is engineering a transformation with automation, innovation and aggressive expansion.
And in this report, we’ll take a closer look.
Automation & Data
Automation can save fast-food companies $12 billion per year, according to restaurant consultancy Aaron Allen & Associates.
From self-ordering kiosks to robots that bring your food, customers are seeing McDonald’s automation investments take hold in real life ... and in real time.
Like with ...
A McDonald’s robot delivering food:
Or folks ordering on a kiosk:
And an automated McDonald’s in Texas:
But cost-savings (aka “efficiencies” in corporate-speak) will only take you so far. If you want true greatness, you need true growth.
You have to feed that “top line.”
McDonald’s is doing exactly that: In addition to the cost-savings from automation, the chain is using digital-sales boosters to rev up revenue growth.
Take the McDonald’s app. It offers signup incentives like free food. And it allows app users to stack up points toward free entrees and sides down the road.
“Loyalty” perks or rewards aren’t a new idea. But when zooming food prices are gnawing away at your paycheck, scoring free food has a lot of allure.
For the company, because apps make it easy to see the full menu and the “specials,” customers tend to make impulse purchases — boosting the per-customer bill at checkout.
One final point: Employees actively promote the McDonald’s app. For anyone hitting the Golden Arches drive-thru, before you place your order, the first question the worker is likely to ask is “Will you be using your McDonald’s app today?”
In McDonald’s top six markets in 2023, systemwide digital sales came to $9 billion, a 40% increase.
And this “New McDonald’s” is getting new growth with a new idea.
Meet CosMc’s
In a December 2023 presentation, McDonald’s CEO Chris Kempczinski said that his company doesn’t have a strong presence in the “afternoon beverage pick-me-up” market, which is a $100 billion opportunity.
Enter CosMc’s, a drive-thru-only venture that Kempczinski described as "what would happen if a McDonald's character from the 1980s that was part alien, part surfer, part robot" opens a restaurant.
Launched in Illinois in December 2023 – with plans for more “test” stores in Texas here in 2024 – CosMc's menu is focused mostly on drinks ... with a few sandwiches and snacks available.
Just take a look ... starting with drinks:
Snacks and desserts:
And some specialty sandwiches alongside a few familiar McDonald’s staples:
It’s way too early to judge the outcome. But the launch in Illinois resulted in absolute pandemonium.
Some folks willingly waited two hours to go through the drive-thru:
And the reviews are in:
Staying with the growth story, McDonald’s is making a play for an even bigger customer base.
Golden Arches Everywhere
McDonald’s will expand from a little over 40,000 restaurants in 2022 to 50,000 by the end of 2027.
It also wants to plant more Golden Arches in China, increasing its presence from 6,000 stores now to 10,000 stores by 2028.
If you’d like to dig a little deeper into the investable opportunity, McDonald’s details it with five short bullet points in the company report: Reimaging the Future of McDonald’s: Investor Update 2023.
Final Thoughts
I grant you: Over the last five years, McDonald’s 59.52% return lags the S&P 500’s return of 78.85%.
But when you’re talking about stocks, it’s the “what comes next” that really matters. McDonald’s is responding. And this new game plan of automation, innovation and expansion can ignite McDonald’s next big growth surge.
In short:
✅Automation cuts costs.
✅Data insights can increase sales and customer loyalty.
✅Innovation brings more people through the door (or the drive-thru in this case).
✅And expansion reaches previously unserved folks.
This is the kind of stock too many investors overlook — or flat out ignore — because it’s “too obvious” or because “the story seems boring.” That’s okay: It gives wealth-building folks like us “first-mover” advantage. We can grab the stock now — before the snoozing “masses” realize what’s happening.
