Is McDonald’s a Great Long-Term Investment?

PHOTO CREDIT: McDonald’s

OVERVIEW

Why You Should?

  1. Many people think about McDonald’s as a fast food restaurant chain, but it is much more than that. At most of its locations, franchisees pay rent on the land that their location is on to McDonald’s, who is the official land owner. No other restaurant chain does this and it has proved beneficial to McDonald’s growth. The company owns a lot of lucrative land it large cities to small towns around the world.
  2. McDonald’s has an extremely strong brand recognition round the world. The double arches represents an old and classic American fast food restaurant around the world. In fact, there are many consumers in international markets who prefer to eat at McDonald’s despite there being an abundance of local and better options. This brand recognition and loyalty will benefit the company’s future growth and will also benefit investors in the company.
  3. McDonald’s is a great reopening play in an investor’s portfolio. The company has had to shut down or limit operations in all of the restaurants that they have. This has caused a drop in sales in areas with widespread lockdowns (like Europe and Asia). This has hurt the company but once these areas start to reopen, the company will once again have strong growth opportunities. This will also benefit investors in the company.

Why You Should Not?

  1. The COVID-19 Pandemic has hurt the entire restaurant industry. McDonald’s is no different as the company saw a drop in sales from locations found in tourist areas and areas with lockdowns. Higher cleaning costs and fees have also hurt the company. However, once this pandemic is over, the company will return to strong growth.
  2. McDonald’s has been impacted by changing consumer trends in the past. For example, consumers want healthier and more environmentally friendly options (like plant based meats, salads, etc.). McDonald’s has reported weaker results in the past due to this. However, the company has been investing into the future of food as they partner with any plant-based meat brands and offer healthier food options.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.