McDonald's (MCD) shares have managed to buck the rest of the market's woes of late, but as the global economic slowdown continues even fast-food giants are being forced to make some tough (and instructive) choices.
McDonald's Corp. (MCD) is slashing menu prices by nearly one-third for some items in China amid the country's sputtering economy.
Among the new offerings is an "Everyday Super Value Meal" that includes combo meals for 16.5 Chinese yuan ($2.41) and some individual items for CNY6 ($0.88).
McDonald's said these new prices and meals will save customers up to 32.6% off previous prices.
The fast-food giant is also offering a loyalty card that gives customers 20% off certain meals at the company's 1,050 China locations.
"It's our goal to make sure McDonald's is affordable and accessible to more and more consumers," Jeff Schwartz, chief executive of McDonald's China, said in a statement.
Price cuts are an interesting reaction. They highlight McDonald's less pedestrian status abroad, and hint at domestic slowing in China, though the ultimate impact on McDonald's shares seems likely to be small.
Standard & Poor's left a "strong buy" rating on the company, saying: "While the move may be viewed as a proactive response to recent lower commodity prices in China, the move may also be in response to the ongoing dramatic slowdown in the economy. Weakness is likely having a more pronounced effect on spending in Western-style restaurants, to which visits are still viewed by many as a luxury."
Whatever happens in China, McDonald's remains one of the few happy stories on Wall Street right now. Along with Wal-Mart, it was the only Dow component to end 2008 with a year-on-year gain and its shares have held up nicely thanks to solid sales. Plus, there have been a few media love notes to Mickey D's lately. For more see the NYT and most recently Forbes.
Muser of NM @ Feb 05, 2009 15:47:29 PM