McDonald’s diners have said goodbye to salads. Stock investors should be glad they’re gone.
A pandemic-driven menu overhaul at McDonald’s Corp. has eliminated more nutritious menu options such as grilled-chicken sandwiches and fruit and yogurt parfaits. The world’s biggest restaurant company is trimming out offerings to move diners through lines and drive-thrus faster and with less staff — a key necessity as restaurants struggle to attract and retain workers.
These items likely won’t be returning anytime soon, and that should bolster profitability, BTIG LLC analyst Peter Saleh said. While mounting commodity and wage expenses have weighed on restaurants’ margins in recent quarters, faster service and higher sales can help to offset that. McDonald’s says it has shaved about 30 seconds off of its drive-thru wait times over the past few years, in part thanks to the menu cuts. This has a noticeable impact for investors: Restaurant margin, a key measure that takes into account operating costs, is expected to improve to 16.2% in the second quarter, up from 14% in the prior period, according to estimates compiled by Bloomberg.
