This May Be Bigger Than Just McDonald's

 | Jul 22, 2013 | 11:30 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

mcd

,

cmg

I'm struggling with this McDonald's (MCD) disappointment. Perhaps I am just spoiled by its previous greatness. Or maybe I am just jaded, as I was with Coca-Cola (KO), when I see this kind of blame game and get a sense that it's being caused by industry weakness and not by the company's execution.

First, just as with a can of Coke, you can't blame economic weakness for this softness in McDonald's, given how little a meal there costs. We used to think McDonald's benefits from softness in the economy. Now we think it is a loser in this environment?

Second, and more important, I keep thinking back to what Chipotle's (CMG) chief financial officer told me on "Mad Money" Friday. Jack Hartung said sales are picking up in part because of a continued recognition that, despite higher prices than the competition, people want food with integrity. In other words, they want to be protected from the food chain if they can be, because they regard it as corrupt and unhealthy.

Think about it like this: Chipotle is to McDonald's as Whole Foods (WFM) is to Safeway (SFY). One protects; the other defends.

Right now, there is a sense in this country, and I believe in Europe, that you are what you eat and drink. A striking revulsion is developing against non-natural, non-organic meat, and against carbonated soda.

Now, McDonald's is currently pushing some new initiatives. If they catch on, of course, maybe the company can stem the tide. But this is the third straight earnings miss, and after that you have to wonder whether something structural is occurring, especially when companies that produce more expensive food -- like Chipotle or, for that matter, like Panera (PNRA) -- continue to excel.

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.