>> McDonald's has been on a successful run ever since CEO Steve Easterbrook took over the top job three years ago. All day breakfast, story models and digital payment kiosks, all big hits under his tenure. But there's growing pessimism future victories may be harder to come by. The research team at RBC sounded the alarm Friday, and investors went running for the quickest exits.
McDonald's stock dropped five percent in the biggest one day tumble in almost a decade, and was the worst performer in the DOW. The research team's worry, the new low cost $1, $2, $3 menu launched at the start of the year, is stealing away attention from McDonald's other promotional efforts, particularly at breakfast time, when McDonald's holds a sizable lead against the competition.
And that's not the only thing causing stomach pains. Research suggests the budget conscious menu is showing its age and lacks the pizzaz it once did with the latest items failing to connect with consumers. McDonald's launched the new range of items as a way to keep consumers looking for cheap fast food coming through the doors, while at the same time, raising prices just a bit in order to stop eating away at profits.
The early success of the original value menu prompted rivals to launch their own versions, threatening to engulf the entire industry in a race to the lowest price. Analysts say McDonald’s now has to come up with something else to get diners back. At the same time, consumer confidence is rising, wages are up and the Trump tax cuts are putting a few extra dollars in consumer's wallets.