We’re excited to have Marcus Estes back on the podcast to talk about finance because of his ability to make this stuff compelling! Last season we had Marcus on to talk about a case study on hedge funds and shareholder activism in the burger business. This week we’re skipping the case study in order to talk about the 10-K.
A 10-K is a report filed by publicly traded companies every year about financial performance and is required by the SEC. This filing includes a bit about the history, organizational structure, financial statements, earnings per share, subsidiaries, executive compensation, and other relevant data about a company.
But unless you work in finance you’ve probably never looked at one. This is why we called in Marcus.
Marcus looks at a 10-K like an ancient Babylonian might look at the entrails of an animal to divine the future. He’s not really looking at literal facts and figures, but instead interpreting the larger cultural story that those facts and figures might speak to.
How does Shake Shack compare to McDonald’s? Well, we could pull up their 10-K, or look at their stock price (SHAK 0.00%↑) but I think the Marcus method of analysis means we need to review a burger…
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Next Up: Special Guest Cabel Sasser
Next week we have special guest Cabel Sasser who gave an absolutely amazing talk at last years XOXO festival. We will be discussing, and spoiling, his talk, so please go watch it now. It also just happens to be one of the best things we watched last year.
Mike is still obsessed with MCD 0.00%↑ making it to $300 per share and holding there. Not just because he bought some shares, but because of the “behavioral resistance” we talked about in the episode.
While we don’t expect McDonald’s to be making any drastic changes (like switching to beef tallow) there has been news, speculation, and rumors of what is coming next. Could any of the following be the reason for a $300+ share price?
Snack Wrap
McDonald’s US President Joe Erlinger has confirmed that the Snack Wrap is coming back this year:
"The Snack Wrap will be back in 2025. This has a cult following. I get so many emails into my inbox about this product. It will be back in 2025."
Carrots in a McDonald’s?!?!
There have been rumors the new Snack Wrap will be an extension of the McCrispy brand. This seems to coincide with the McD push on more chicken items which have better margins for the company.
The Big Arch
McDonald’s is testing a new sandwich in Canada called the Big Arch, which is a double quarter pounder with crispy onions and 3 slices of cheese and a new sauce. This seems to be a move to maintain control of the “Big Burger” space, which might be a response to the number of special orders of the Big Mac where people customize it with the bigger quarter pounder patties.
This burger is truly a big boy (it’s twice the calories of a Big Mac) and is being tested in three international markets (including Canada). The rumors of it expanding to the US are based on the fact that CEO Chris Kempczinski himself first introduced the new item and CFO Ian Bordan said in March of last year:
“In the past, you would have seen us try and get after that opportunity in 20 different markets in 20 different ways. And then you don’t have the ability to build a global equity that you can drive at scale.”
Deals & Promotions
Starting this month the company will launch a new McValue menu and the popular $5 Meal Deal (sandwich, 4-piece nuggets, small fry, small drink) will be extended through the summer.
They are also kicking off a BOGO $1 (Buy One, Get One for $1) promotion on a number of sandwiches this month.
The $5 Meal Deal has been matched by rivals, but it is credited with a boost of 0.3% in US same-store sales from a year ago. The question is, as people save money by eating at home, can the new deals and promos not just keep customers coming back but entice more people to choose a stop a McDonald’s instead of the grocery store?
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