- McDonald's is a top restaurant pick from analysts at Wells Fargo and Stifel, thanks in part to the chain's successful Travis Scott partnership.
- Well's Fargo's Jon Tower writes that McDonald's "is the best positioned restaurant to re-capture sales and re-establish habits as consumers resume food-away from home spending."
- Tower and Stifel's Chris O'Cull both applauded the success of the Travis Scott partnership, which helped win over Gen Z customers — something the chain has struggled to do for roughly 20 years.
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Analysts have their eyes on McDonald's, as other restaurants struggle to survive the pandemic.
This week, analysts at Stifel and Wells Fargo highlighted McDonald's dominance in the world of fast-food. The company can thank Travis Scott for further elevating the chain as a Wall Street favorite.
"McDonald's stands out among limited service peers following the introduction of the Travis Scott meal, which drove a meaningful acceleration in the visitation trend in recent weeks and could be taking share from competitors," Stifel's Chris O'Cull wrote in an industry update earlier this week.
Well's Fargo's Jon Tower wrote in a note on Thursday that McDonald's "is the best positioned restaurant to re-capture sales and re-establish habits as consumers resume food-away from home spending."
McDonald's has laid the groundwork for a "multi-year run" of compounding same-store sales and growing profits, according to Tower.
Tower also noted the success of the Travis Scott Meal and spicy nuggets — back-to-back hits for McDonald's over the last month. Business Insider reported on Wednesday that the spicy nuggets were so successful that they started selling out two weeks after their launch.
Travis Scott could permanently change how McDonald's thinks about marketing
The success of the Travis Scott meal could have a long-term impact on McDonald's marketing strategy.
In essence, the Travis Scott meal was able to combine existing menu items together as the rapper's "favorite meal." For $6, customers could get a Quarter Pounder, fries, BBQ sauce, and a Sprite. It was an amazing success, with McDonald's locations beginning to run out of Quarter Pounder ingredients — something that hadn't happened earlier in the pandemic, even as meat processing plants across the US shuttered.
The Travis Scott partnership helped McDonald's connect with customers aged 11 to 24 years old, Tower says, an age group that McDonald's has struggled to reach over the last 20 years.
McDonald's CMO Morgan Flatley told Business Insider prior to the launch of the partnership that McDonald's needed to work with stars like Scott to stay relevant to younger customers. According to Flatley, people under the age of 34 are "becoming more and more challenging for brands to reach."
"How they engage with media is different," Flatley said. "They look to recommendations much more than any other generation has. They're very reliant on social media. They're very reliant on their friends."
Read more: The inside story of McDonald's Travis Scott collaboration, as the fast-food giant digs into its 'marketing war chest' and franchisees protest the partnership
Tower said the deal could create a "new promotional paradigm" for McDonald's. The chain, Tower theorizes, could start mixing short-term and longer-term limited-time offerings, as well as campaigns about value more generally.
O'Cull said that Stifel data collected from people's mobile phones indicates that McDonald's may have drawn customers away from rivals with the Travis Scott deal, as significantly more people visited the chain when it launched in early September than had in weeks past.
"Mobile location data accelerated meaningfully the week the Travis Scott meal launched," O'Cull said. "While results have tapered since the initial week, traffic levels remain meaningfully above July and August levels. This increase has coincided with declines at competitors Jack in the Box and Taco Bell."
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