McDonald’s Corporation (MCD): Is It Time to Buy Fast Food?

Burger King recently completed a re-imaging program, which doesn’t bode well for the company. It needs to start seeing returns from that program, and fast. Repurchasing shares will help support share prices, but sooner or later it will need to show stronger financials.

As the result of a management shuffle by 3G Capital, Burger King Worldwide Inc (NYSE:BKW)’s CEO Bernando Hees will leave his post by July 1. He is to be replaced by Daniel Schwartz, the current CFO. Schwartz and Josh Kobza (his successor as CFO) have said that they will continue to emphasize value offerings, which gave the company a slight boost in sales in March.

In January and February, the company aggressively pushed its premium offerings and was rewarded with a decrease in sales. The balanced approach advocated by the new management team could be a success, but the company’s recent track record demands a cautious approach when investing.

Wendy’s is at the beginning of its own re-imaging program, and it has already seen sales tick upward. The Wendy’s Co (NASDAQ:WEN) is following a similar strategy to McDonald’s, relying on menu innovation and health-conscious options. It has also launched its own share-repurchase program, although it is not nearly as ambitious as Burger King Worldwide Inc (NYSE:BKW)’s ($200 million) or McDonald’s ($350 million+). Of the three companies discussed, Wendy’s sits in the best position.

Foolish conclusions

McDonald’s Corporation (NYSE:MCD) is capable of exhibiting growth in the mid-term and long-term. Its strongest competition will come from The Wendy’s Co (NASDAQ:WEN), which currently shows stronger numbers than McDonald’s. Although McDonald’s is capable of showing growth, it needs to continue innovation in its menu offerings. Its strong showing in May can be largely attributed to its new menu options, and that’s a good model for the company going forward.

In a stronger economic climate, McDonald’s needs to continue offering new products to recruit new consumers and keep old ones. Both McDonald’s and Wendy’s will follow this model, and it’s really a question of who does it better. Right now, The Wendy’s Co (NASDAQ:WEN) has the upper hand according to its financials, but that’s not set in stone. Watch both of those companies, and be ready to jump if the advantage swings one way or the other.

Hunter Hillman has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide Inc (NYSE:BKW) and McDonald’s. The Motley Fool owns shares of McDonald’s Corporation (NYSE:MCD).

The article Is It Time to Buy Fast Food? originally appeared on Fool.com.

Hunter is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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