Chipotle Hands McDonald's Its Lunch

McDonald's released January same-store sales today and showed further deterioration in its U.S. business.

Feb 10, 2014 at 3:30PM

Markets have gotten off to a slow start to the week, which isn't all bad considering that stocks started last week by plummeting 2%. The Dow Jones Industrial Average (DJINDICES:^DJI)  is down 0.05% with 30 minutes left in trading, while the Nasdaq Composite and S&P 500 indexes are both up less than a half percent on the day.

There wasn't much economic news to drive stocks, and with a weekend to think over January's jobs report it appears there's enough bullish news there to keep the markets at least mixed.

McDonald's continue to fall flat
The big news today was out of McDonald's (NYSE:MCD), which continues to see health-conscious U.S. consumers leave its stores in droves. The company said this morning that January same-store sales in the U.S. were down 3.3%, following a 1.4% drop in the fourth quarter. Overall, same-store sales were up 1.2%, helped by a 5.4% rise in Asia-Pacific, the Middle East, and Africa.  

This is a stark contrast to Chipotle Mexican Grill (NYSE:CMG), which reported a 9.3% increase in same-store sales in the fourth quarter. Not only are more customers choosing Chipotle and other healthier options than McDonald's, they have pricing power as well.  

Recent numbers are indicative of long-term consumer trends of people eating healthier, which isn't McDonald's forte. The revenue chart below shows just how strong Chipotle is versus its larger rival.

MCD Revenue (TTM) Chart

MCD Revenue (TTM) data by YCharts.

McDonald's has been through challenges before, but investors should be worried about how the company will adapt to new habits and competition that has a reputation for offering both quality and food that is relatively healthy.

Ironically, McDonald's could have avoided this problem if it would have kept Chipotle under its control, which it was until its IPO in 2006. I guess McDonald's bosses didn't see the large opportunity in the fast-casual dining space, something Chipotle is now dominating, taking share from its former owner.

Who is the next Chipotle?
Finding growth stocks like Chipotle can be hard to do until it's too late but Motley Fool co-founder David Gardner has a long history of picking growth stocks that beat the market. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Travis Hoium manages an account that owns shares of McDonald's. The Motley Fool recommends Chipotle Mexican Grill and McDonald's. The Motley Fool owns shares of Chipotle Mexican Grill and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers