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McDonald’s Management 2015 Initiatives and Outlook

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Apr. 24 2015, Published 3:50 p.m. ET

Management initiatives

After the last earnings call, McDonald’s (MCD) then CEO Don Thompson stepped down and was replaced by Steve Easterbrook. During the recent earnings call, the new CEO said, “My overall vision is for McDonald’s to be seen as a modern progressive burger company delivering a contemporary customer experience.”

McDonald’s (MCD) has been struggling to grow revenues as you can see in the chart below. As a result, management announced plans to close about 350 underperforming restaurants, mainly in the US, China, and Japan.

One new initiative that McDonald’s announced in March is that it will discontinue using chicken raised on antibiotics that could have an effect on humans.

As well, McDonald’s announced that it will pay one dollar over the minimum wage mandated locally and offer paid time off. Read Minimum Wage an Ongoing Concern for the Restaurant Sector to learn more.

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The competition

Newer burger chains such as Shake Shack (SHAK) and Habit Burger (HABT) offer more compelling menus to its customers. These restaurant also use quality ingredients. In the Australian market, Shake Shack plans to introduce new menu items alongside its value platforms. To learn more, read Shake Shack Filed For An IPO—What Investors Need To Know.

A good way to get exposure to several restaurants at the same time is through the Consumer Discretionary Select Sector SPDR Fund (XLY). This ETF holds 4% of McDonald’s stock and 1.5% of Yum! Brands (YUM).

Performance outlook

The company expects negative same-store sales growth in the US and UK markets.

On a full-year basis, the company anticipates an impact of $0.40 to $0.45 on EPS (earnings per share) as a result of foreign currency fluctuations and the stronger US dollar.

The company also announced that it would provide additional outlook information on May 4.

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