McDonald's and Sweetgreen downgraded: trend ticker

00:00 Speaker A

Now time for some of today's trend kickers. We look at a few meal names, McDonald's and Sweetgreen. If we come to me now, we have the Yahoo Finance Senior Reporter Alexandra Canal. Ali, first, let's talk about a little golden arches here, McDonald's downgraded from at the North Coast Research on neutral. The company has had a business rating for the share for more than two years, and the analyst expects a modest profit growth to proceed, since consumers are becoming more sensitive and the costs for the company remain a headwind. If you look at a look at the stocks of Mickey d's, you are flat, just until today.

00:45 Alexandra channel

Yes, McDonald's is consistently known as this consumer -friendly inventory. We see that this is reflected in the previous annual profits. We are about 9%, we surpass the S&P 500, but we saw a few headwinds in these results of the Q1. We missed sales and operating results, which indicates that the consumer withdraws with lower incomes. And we only hear from Aaron Dunn about the program that the low-end consumer is currently weak. Apart from that, we saw some innovations for McDonald's. In this research note, they talked about how traffic increased the pace after the global start of the Minecraft Movie PhD, but this traffic upswing begins to infer a little. Perhaps to think about something when McDonald's thinks about his marketing strategy. If we see them work with large celebrities or see a new brand partnership, we see this increase in traffic. But soft traffic will affect their ability to increase prices that the operators want to do in view of a higher inflation. So it's a difficult situation, isn't it? I think you have a lot of competition in the QSR room in general. The value continues to exceed for a company like McDonald's, but that also means that its competitors are also worth. How do you separate? This innovation, this marketing, depends on this advertising. So we will see where stocks really go from here.

02:49 Speaker A

Yes, you call marketing a wild card, but you have mentioned that the market leading position under QSR, Quick Service Restaurant and Burger Peers, who believe that you will save the margin improvements and be more difficult to generate here. This will be interesting, the need for value, although it remains up to its point of view. Next let's talk about this other big call on the street. Sweet Green Cuts from overweight at JP Morgan and the company has had an overweight rating for the stock since the start of its cover last year. The analyst quotes high menu prices, growing competition and medium -term financing needs as reasons for the downgrading shares. If you talk under this, you are currently about six and a half percent lower.

03:45 Alexandra channel

Yes, let's bring us up to date for a year for a year because you are the stocks below. I mean 43%. Oh, it was just a brutal time for this company. And look, I love my sweet green. I appreciate it. However, it is expensive. If you want a bowl or a salad with a significant protein, you pay at least $ 20. So it's a small pleasure. And at this point we talked about the withdrawal of consumers again, a large part of this gentle survey data that we have out there. You really have to look at your price strategy. You know that it will be a difficult position, I think Sweet Green can go forward because they lean into this experience with a higher end. And I think if you go too sweet, you want that, right? You want the non-oils. You want the Farm Salad Table and Table

05:00 Speaker A

I want it to feel fresh.

05:02 Alexandra channel

You want it to feel fresh, but that's free. This was interesting from this note that the restart of repaying student loans could increase additional loads for the wallet. This is not something that I initially thought about, but maybe since Sweet Green is usually in college cities and that the younger consumer does it could be something that you may have to pay attention to.

05:41 Speaker A

It is also interesting that you cite some of the potential impending financing needs for the 2026 financial year in connection with ambitious development goals. And they say that this should alleviate the trajectory in their short -term medium -sized growth, which is almost in the medium term, I should say here. Uh and this is not something you always hear when you think about a company like Sweet Green that continues to be scaled, and what the analysts look through this opportunity, as well as the mixture of one of the headwinds you mentioned from students who look through the opportunity.

06:45 Alexandra channel

Right.

06:46 Speaker A

06:47 Alexandra channel

And her loyalty program too. I have the feeling that you have rushed it and maybe pull yourself back a bit. I went to Georgetown where these founders come from. I went to the original sweet green and at that time it was actually so much salad than today. And they had froyo and they have the opportunity to make a wrap. None of this now exists. The salads are literally half of what we used to come back. And you know it is one of these things in which I think about franchising from everything and how you might have to withdraw the costs a little.

07:43 Speaker A

Wow. Yes.

07:54 Speaker A

Right.

07:55 Alexandra channel

Yes.

07:56 Speaker A

You have to lean into experience. I think if you scale like this, it is easier to replicate via so many other franchise companies.

08:06 Alexandra channel

Harder if you want to grow.

08:10 Speaker A

Absolutely. Ali, it is easy to hear that you were nearby for the heyday of sweet greens.

08:15 Alexandra channel

Listen, the inner shovel.