McDonald's Is Following Domino's Lead With Focus On Digital Engagement

Following the example of Domino's Pizza, Inc. DPZ, BTIG analyst Peter Saleh said McDonald's Corporation MCD push into mobile ordering and pay-in-restaurant kiosks should help drive value to the stock.

Saleh maintained his Buy on the Golden Arches and raised his price target from $154.30 to $175.

“We believe there is a material first mover advantage for concepts such as Domino’s Pizza, Panera Bread and now McDonald’s as they reinvest those savings back into price, value or even food quality to gain market share,” Saleh said. “We believe McDonald’s planned investment in the Experience of the Future initiative could allow the concept to differentiate itself on value, something management has acknowledged it needs to reassert its leadership in, and recapture considerable market share from its quick service competitors.”

McDonald’s Looking To The Future, And It Should Pay Off

Saleh highlighted three specific areas where McDonald’s initiatives could help drive value:

• Mobile ordering and pay and the Experience of the Future could boost same-store sales 5 to 6 percent.
• Kiosk ordering will reduce labor expenses.
• McDonald’s could recapture the 500 million transactions it has lost since 2012, which would lead to over $2.7 billion in new sales.

Overall, this transition should be quite lucrative for McDonald's.

"McDonald’s technology investment should lead to a lower relative cost structure, allowing the concept to reinvest back into its value platform to regain lost market share," Saleh said.

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