Please ensure Javascript is enabled for purposes of website accessibility

How McDonald’s Stock Is Handling the Coronavirus

By Demitri Kalogeropoulos - Aug 19, 2020 at 12:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales trends are improving, but the fast-food giant has a lingering breakfast problem.

What happened

McDonald's (MCD -0.80%) stock has barely kept pace with the market through mid-August, with shares up about 6% compared to a 5% increase in the S&P 500.

That's a better result than many rival fast-food giants such as Taco Bell owner Yum Brands, and Restaurant Brands International, the owner of the Burger King franchise. But McDonald's is lagging other peers including Chipotle and Domino's, which are both up over 30% so far in 2020.

Friends sharing a fast-food meal.

Image source: Getty Images.

So what

Investors weren't excited to learn in late June that McDonald's sales are still shrinking in the core U.S. market. While some of its peers -- notably Chipotle -- raced back to growth, the fast-food specialist is seeing persistent demand pressure in the breakfast hours as consumers continue to work more from home and avoid traditionally high-volume places in metropolitan areas. This aspect of the pandemic has also hurt Starbucks' business, which is still several months from returning to growth, management said.

Now what

McDonald's is planning a huge marketing push in the second half of 2020 that CEO Chris Kempczinski thinks could convince more people to return to its restaurants. In the meantime, the chain is planning to lean on its robust drive-thru network to fend off rivals during the tough industry conditions ahead.

Demitri Kalogeropoulos owns shares of Chipotle Mexican Grill, McDonald's, and Starbucks. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Domino's Pizza. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$259.28 (-0.80%) $-2.08
Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$87.27 (1.48%) $1.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.