In a 2017 HBO documentary, Warren Buffett explained that he let the market decide his McDonald's (MCD) breakfast. When stocks were up, he'd order the $3.17 bacon, egg, and cheese biscuit. When they were down, he'd go for something cheaper. Going by McDonald's own stock, he'd be picking the cheaper option right now. The shares are currently about 30% below the record high they hit in March, and they're now trading near their lowest level since October 2022. They fell about 5% on September 23 alone, after the company’s first investor day in nearly three years.
Investors were looking for a positive sign from a stock that has been falling for most of the year. Instead, things got worse. The event showed how costly the turnaround will be. McDonald’s plans to spend about $8.5 billion supporting franchisees through 2036 through rent relief and help with restaurant upgrades. About $5 billion of that comes by 2030. The company also confirmed its goal of reaching 50,000 restaurants has slipped a year to 2028, citing cautious consumers and higher building costs. Management does expect operating margin to climb from 46.1% last year to the low-to-mid 50% range by 2030. But the market focused more on the costs.
