) held its investor day recently at Oak Brook, Ill. where it
reiterated its long-term plans and provided a brief outlook for
2014. The company also affirmed its commitment to its strategic
plan - the Plan to Win - that calls for optimizing the menu,
modernizing customer experience and broadening accessibility to
Fiscal 2014 Guidance
In 2014, the company plans capital spending in the range of $2.9
- $3.0 billion for opening 1,500 - 1,600 new restaurants and
remodeling 1,000 restaurants.
The company expects commodity costs to increase 1.0% to 2.0% in
the United States and 1.5% to 2.5% in Europe. As a result of
higher employee expenses and costs associated with its
owner/operator convention and Winter Olympic sponsorship, the
company expects general and administrative costs to increase
about $200 million in 2014.
Long Term Expectations Reiterated
McDonald's continues to expect system wide sales growth in the
range of 3% to 5% and operating income growth in the band of 6%
to 7% for the long-term. Return on incremental invested capital
is likely to be in the high teens over the long term.
McDonald's is the world's biggest hamburger chain that has
struggled to boost its sales since the past few quarters. To
boost decelerated comps in recent times, McDonald's remains
committed to product innovation, offering value menu, extending
McCafe premium beverage line as well as a variety of core items
and execution of stronger marketing messages.
In Sep 2013, the company added Pumpkin Spice Latte to its menu.
At the end of Oct 2013, the company announced that in
Kraft Foods Group Inc.
), it is working to test the sale of McCafe bagged coffee at
retail locations such as supermarkets in 2014.
Like McDonald's, other players in the industry, including
Dunkin' Brands Group, Inc.
), are also trying to diversify beyond there traditional
food/beverage offerings. In Sep 2013, Starbucks improvised its
sandwiches and introduced new salads and baked goods to attract
more customers in the afternoon and evening hours. Earlier this
month, Dunkin' Brands also unveiled the new Spicy Smoked Sausage
Breakfast Sandwich, which features a spicy split sausage link
with egg and American cheese, served oven-toasted on an English
With most industry players trying to innovate and grab the larger
share of the pie, we will have to wait and see as to who emerges
the winner. Currently, McDonald's Starbucks and Dunkin' Brands
all have a Zacks Rank #3 (Hold).
DUNKIN BRANDS (DNKN): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
STARBUCKS CORP (SBUX): Free Stock Analysis
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