麦当劳：是否迎来转机？

Price Target MCD McDonald's (MCD): Turning the corner? Following McDonald’s worldwide franchisee convention, we spoke with McDonald’s investorrelations and below are our key takes. McDonald's is advancing a more ambitious innovation agenda than we had previouslyappreciated, with a particular emphasis on beverages and chicken.On chickenspecifically, management’s comments were encouraging as the company is testing hand-breaded chicken in the US following the success internationally, where taste scores inMalaysia reportedly exceed those of the category leader, and the gap is closing in China. Thekey risk we see is franchisees’ capacity to absorb the capital and labor complexity, thoughthis could potentially be offset by reallocating labor freed by AI-driven drive-thru automation.Reflecting on the industry overall, we do wonder if, with this intensified menu innovation,restaurants are simply running faster to remain in the same place. A store refresh cycle appears imminent, as the system needs to evolve to successfullyimplement menu changes and respond to how consumers interact with the brand.New designs may feature a standalone station for hand-battered chicken, only one drivethrough window and a play area for kids. While prototype designs will vary, Managementconfirmed a full-menu orientation across all formats for the store redesigns, which in ourview should help protect average unit volumes even as layouts evolve. That said, questionsremain on how the cost will be shared between McDonald’s and franchisees. Industry-wide traffic weakened sequentially through May, though we expect easinggas prices to provide modest relief to near-term trends. We also think it is notable thatMcDonald's is actively evaluating menu architecture in response toGLP-1 adoption(e.g.different protein formats and prep methods), which we view as management treating thebehavioral shift more seriously.We view beef as a medium-term overhang for franchiseesentiment with elevated costs going into 2027.McDonald's is hedged through 2026,though the six-to-nine month lag implies that spot-price movements will flow through at adelay. We believe franchisees could therefore still face more elevated costs well into 2027even if beef prices begin to moderate before year-end. That said, we think McDonald’s mixprovides some insulation relative to peers, as Management indicated that no single itemaccounts for more than 15% of the food-and-paper basket. Investment Implications We maintain our Market-Perform and PT of $310. DETAILS Following McDonald’s worldwide franchisee convention, we spoke with McDonald’s investor relations and below are our keytakes. Innovation and Product Quality McDonald's is advancing a more ambitious innovation agenda than the market has previously appreciated, witha particular emphasis on beverages and chicken.Management highlighted beverages as a major runway, includingcold coffee, crafted sodas, refreshers, and energy. Franchisees sampled 32 different types of beverages at the worldwideconvention, as part of Management signaling that there was a long runway for beverages. On chicken specifically, management’s comments were encouraging as the company is testing hand-breadedchicken in the US following success internationally.The experience in Malaysia and China appears to provide proof ofconcept that McDonald’s can execute at a higher quality level in this category. We view the Malaysia result as particularlynoteworthy given commentary that taste and quality scores there exceed KFC, while in China performance is said to be closingthe gap with the leading competitor, suggesting the brand can become more credible in chicken with the right operating model. That said, we do not think the path to systemwide adoption is straightforward as hand-breaded chicken introduceslabor intensity, raw-product food safety complexity, dedicated fryer and holding-equipment needs. The situationin Malaysia and China might be different due to different labor costs and store format sizes. Additionally, it could meanmore upfront capital requirements, all of which could pressure franchisee returns if not offset by better sales mix or laborredeployment. As such, we are unsure how franchisees will respond to the greater equipment and labor cost required - andthink that getting their buy-in will be critical. Restaurant Design and Operations We view McDonald’s new growth strategy with redesigned restaurants and more efficient back-of-house systemsas incrementally positive for unit economics.As unveiled during the conference, McDonald’s new growth strategy includesredesigned restaurants and more efficient back-of-house systems, with automated ordering under pilot in a small number of USrestaurants. Management indicated there will be multiple prototypes, but within a narrower set of designs (e.g. some might haveplay spaces for families). Additionally, we note that the format will retain a full-menu orientation, which we view as supportive ofmaint