Fast-food giant McDonald's (NYSE:MCD) has not had the best year, as shares are up less than 9% year to date and it was the third-worst-performing Dow Jones Industrial Average (DJINDICES:^DJI) component of 2013. After that kind of performance, shareholders are wondering if now is the time to sell or if they should hold on for better days. Let's see if we can answer those questions.
At an investor meeting held in mid-November, the company said it will be focusing on three aspects of the business in 2014: optimizing the menu, modernizing the customer experience, and broadening accessibility.
McDonald's has always been seen as the best-oiled machine in the fast-food industry, but lately it seems the company has missed an oil change or two. In McDonald's push to innovate and develop a healthier menu, the company threw a number of new and difficult-to-prepare items at its employees, which made the fast food seem not so fast. At the investor meeting, the company's U.S. president, Jeff Stratton, even told those in attendance that the company rolled out too many new products too fast. He also said the company should retrain employees on how to prepare the items and add new food-preparation tables to the stores. With all that said, I would be surprised if the company came out with any new items in 2014 -- or at least didn't wait until the latter part of the year.
McDonald's plans to remodel more than 1,000 locations around the world, which will modernize the customer experience while also broadening accessibility. In 2014, it also plans to spend somewhere between $2.9 and $3 billion to open 1,500 to 1,600 stores around the world -- the first McDonald's in Vietnam will open in 2014 -- with 350 to 400 of the new shops being McCafe concept stores, since coffee continues to be a major growth-driver.
Furthermore, McDonald's plans not only to open more of the McCafe coffeehouses but also to offer its premium coffee in grocery stores around the country. The restaurant chain has cut a deal with Kraft Foods to test out the concept and see if consumers are interested in drinking McDonald's at home.
Lastly, the company is forecasting 3% to 5% same-store sales growth and 6% to 7% operating-income growth. Weak same-store-sales numbers were one reason the stock lagged the market in 2013, and unless the company can hit its projected targets, it will likely be a reason the stock stumbles again in 2014. But as management attempts to reinvigorate the company and get customers excited about McDonald's again with new locations, remodeled older spots, and product exposure in grocery stores, it is hard to say whether or not the same-store-sales projections are realistic.
McDonald's has proven in the past that it can innovate, change, and outpace the competition. Based on what the company wants to accomplish in 2014, it appears McDonald's means to maintain its industry dominance. While it may not be the sexiest stock or the fastest-growing company, if you're looking for a stable, decent-dividend-paying stock that is not likely to disappear for the next several decades, then McDonald's is one of your best options.
Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what causing the big market movers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513.
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