It has been said that there are a few “recession proof” businesses – but none as lofty as the king of fast foot – McDonald’s.
You’d be hard pressed to find an American that hasn’t had one this franchise’s burgers, fries or chicken nuggets – and for many of us – this place holds a sense of nostalgia.
Nothing beats the childhood memories of walking into a Mickey D’s – grabbing a hamburger with your friends or loved ones while sitting on uncomfortable plastic seats.
Fun fact: I’m old enough to remember when there were ashtrays on the tables…
One thing about McDonald’s has been the fact that they’ve always been affordable.
That even when times are tough – people can still go and get a volume-based meal for a relatively low cost. It’s why over the past few recessions – the company’s stock prices soared.
That said, those days seem to be over…
It seems the Big Mac is no longer recession-proof.
That’s right – the golden arches have lost some luster…
But why?
Well, it has happened…
For the first time since late 2020 – McDonald’s (MCD) has seen a dip in its sales as diners around the globe tighten their waistbands along with their purse strings.
Who knew that the humble burger would fall victim to the economic crunch?
Inflation hasn’t just rained on the parade of indulgent takeout orders and celebratory dinners…
It’s even managed to make the iconic Big Mac an UNaffordable luxury.
Despite McDonald’s best efforts to introduce new low-cost menu items – the fast-food giant has struggled to keep sales steady in its major markets worldwide.
The result? A revenue of $6.5 billion last quarter – falling short of the anticipated $6.6 billion.
To add French fry salt to the wound – profit plummeted more than 12% from the previous year.
Investors are NOT loving it -and we saw their disdain as we watched as MCD stock prices dropped 15% this year.
But…
Despite the drop in McDonald’s sales – it appears that Americans haven’t entirely closed their wallets.
Data released on Thursday revealed that the U.S. economy grew more than expected last quarter – driven by robust consumer spending.
However, don’t pop the champagne just yet. Experts predict that this spending spree won’t last.
Americans are expected to jump off the hamster wheel of consumerism for the rest of the year – having exhausted their pandemic savings.
Additionally, a measure of consumer sentiment hit its lowest level in eight months last week…
Indicating that the economic outlook is not all sunshine and rainbows.
But that doesn’t mean it’s gray clouds everywhere.
While America and most of the world is pinching pennies – Japan stands out as an exception.
The land of the rising sun had quite the appetite for McDonald’s last quarter.
Sure, shrimp and teriyaki burgers are harder to pass up than lukewarm nuggets – but the real reason lies in the currency exchange.
The yen recently hit a 38-year low against the dollar – making a shopping spree in Tokyo cheaper than one in Times Square.
As a result, Japan is attracting tourists from all over the world – especially luxury-loving vacationers from China.
High-end brands like LVMH, Kering and Burberry are seeing their goods fly off the shelves in Japan – thanks to these spend-happy tourists.
McDonald’s might be struggling to keep its sales up – but the global economy is still a mixed bag of cautious consumers and eager spenders.
Whether you’re a fast-food aficionado or a luxury brand lover – the financial landscape is serving up a bit of everything…
Except, apparently, a steady stream of Big Mac sales.
Yeah, things are definitely… weird. Which is why you’ve got to rely on research and data more than ever if you want to make money with stocks.
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However, we understand that joining isn’t for everybody – but know we’ll be here if you need us.
Either way, keep your eye on the notoriously “recession proof” business…
Things may be changing.
“The key to success is being in the right place at the right time, recognizing that you are there, and taking action!” – Ray Kroc