Here we go again with McDonald's (MCD). I haven't seen anything like this company's marauding nature since Wal-Mart (WMT) and Home Depot (HD) stormed to the north to disrupt the pricing in the department and hardware stores.
This morning's casualty? Krispy Kreme (KKD). Oh, the company doesn't talk about McDonald's directly. They never seem to do so. But when Tony Thompson, Krispy Kreme's president and CEO, talked about challenges to margins and too much promotional activity, that's McDonald's. Steve Easterbrook, McDonald's CEO, has turned this industry upside down in the short time since he took over. Can you believe it is just one year ago this month? He has brought the rest of the fast-food business to its knees.
To me, Krispy Kreme's woes are synonymous with those of Dunkin' Donuts (DNKN) -- heaven knows why that one keeps bouncing. They are morning coffee houses and McDonald's value coffee offering is meant to snare their customers. Starbucks (SBUX) is experiential, so the pressure's not on there, just in case you were thinking true spillover. (Starbucks is part of TheStreet's Action Alerts PLUS portfolio.)
Take a look at the breakdown in Jack-in-the-Box (JACK). That company's being crushed by the value burger meals that McDonald's is offering as well as its all-day breakfast. Management is suspect here. The company's Qdoba business couldn't take share from Chipotle (CMG) despite the latter's devastating E. coli and norovirus outbreaks. And its Jack flagship is right in the cross hairs of McDonald's.
We know DineEquity (DIN) and Popeye's (PLKI) have been wounded, too. The more diversified DineEquity with its IHOP brand is hanging in for certain, but the stock of Popeye's reflects directly the work of McDonald's and its chicken offerings.
Wendy's (WEN) and Restaurant Brands (QSR) have so far held their own. But the relentlessness of McDonald's should keep them hopping and shareholders might keep one foot out the door. This industry seemed to have hit a safety zone as peace had broken out among almost all participants. Easterbrook broke the peace. He started the war.