McDonald’s Traffic Could Take 10 Years to Recover

By Douglas A. McIntyre Published Aug 21, 6:40AM EDT

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Analysts disagreed about how McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) can recover the foot traffic it had before the pandemic.
The fast-food chain operator has no easy answers to its revenue problem.
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Evercore ISI analyst David Palmer says McDonald’s Corp. (NYSE: MCD) is among his favorite stocks. Despite that, he thinks the fast-food chain may take 10 years to recover the foot traffic it had before the pandemic. In the meantime, McDonald’s will need higher prices to keep up its revenue per customer.

According to Yahoo, Palmer said, “McDonald’s traffic began falling in 2012 with the removal of the double cheeseburger from the Dollar Menu, with a 12% traffic decline until 2019 but [that was] more than offset by 22% check growth during that time.” So, between now and the start of the next decade, McDonald’s will need to raise its prices, as it has done for several years. That is confusing.

TD Cowen analyst Andrew Charles largely agrees, but his point of view is different. He told Yahoo, “We are big believers that everyday low priced beverages can be a key traffic driver as we saw the introduction of $1 any size beverages drive a rare year of traffic growth in 2017.”

In the case of both analysts, low prices bring in customers. Unfortunately, married with low menu prices, McDonald’s has a revenue problem.

The analysts’ advice may not work in the real world. Consumers still think the new $5 meals have not helped traffic, according to several sources. High prices kill foot traffic; lower priced menus may bring people back. Neither formula works financially. McDonald’s management has no easy answers.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.