By coinnews 
00:00 Speaker A
Now time for some of today’s trending tickers. We’re watching a couple of food names, McDonald’s and sweetgreen. Joining me now, we’ve got Yahoo Finance senior reporter, Alexandra Canal. Ali, first up, let’s talk a little golden arches here, McDonald’s downgraded to neutral from by at North Coast Research. The firm has had a buy rating on the stock for more than two years and the analyst says they expect modest profit growth ahead as consumers grow more price sensitive and costs for the company remain a headwind. Taking a look at shares of Mickey D’s, they are flat, just barely to the upside right now.
00:45 Alexandra Canal
Yeah, McDonald’s has consistently been known as this consumer friendly stock. We do see that reflected in the year to date gains, we’re up about 9%, we’re outpacing the S&P 500, but we have seen a few headwinds in those Q1 results. We saw a miss on revenue and operating income suggesting that that lower income consumer is pulling back. And we’re just hearing from Aaron Dunn on the program that the low-end consumer is weak right now. That being said, we have seen some innovation for McDonald’s. In this research note, they talked about how traffic picked up pace on the heels of the global launch of the Minecraft movie promotion, but that traffic uptick is starting to abate a little bit. So maybe something to consider moving forward when McDonald’s thinks about its marketing strategy. Typically when we see them partner with major celebrities or roll out some new brand partnership, we see that uptick in traffic. But soft traffic, that’s going to influence their ability to raise prices which operators are going to want to do in the face of higher inflation. So it’s a tricky situation, right? I think in the QSR space in general, you have a lot of competition. Value continues to outperform for a company like McDonald’s, but that also means its competitors are leaning into value as well. So how do you separate yourself? It comes down to that innovation, that marketing, that promotion. So we’ll see where shares really go from here.
02:49 Speaker A
Yeah, they’re calling marketing a wild card, but they did mention that the market leader position among QSR, quick service restaurant, burger peers, they believe will store margin improvements and be harder to generate here. That’s going to be interesting, demand for value though remaining to your point. Next up here, let’s talk this other major call on the street. Sweet Green cuts to neutral from overweight at JP Morgan and the firm has had an overweight rating on the stock since it started its coverage last year. The analyst citing high menu pricing, growing competition, and medium-term funding needs as reasons for the downgrade shares. Moving lower off of this, they’re lower by about six and a quarter percent right now.
03:45 Alexandra Canal
Yeah, let’s pull up a year-to-date chart here because they shares are down. I mean, 43%. Oh, it’s just been 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 some significant protein, you’re paying at least 20 bucks. So it’s a little treat. And at this time, again, we’ve been talking about the consumer pullback, a lot of this soft survey sentiment data that we have out there, you have to really look at your pricing strategy. So, you know, it’s going to be a difficult position, I think, for for sweet green to move forward because they are leaning into this higher end experience. And I think if you’re going to sweet green, you want that, right? You want the non-seed oils. You want the farm to table lettuce and
05:00 Speaker A
I want it to feel fresh.
05:02 Alexandra Canal
You want it to feel fresh, but that comes at a cost. Now, this was interesting from this note, restarting student loan repayments could add additional stress on the wallet. That’s not something I initially thought of, but maybe since sweet green is typically in college towns and that younger consumer is going, that could be something to potentially look out for.
05:41 Speaker A
It’s also interesting that they’re citing some of the potential upcoming funding needs here in the context of ambitious development goals for the fiscal year of 2026. And they’re saying that that should derisk the trajectory in their near-term medium growth, near medium-term growth, I should say here. Uh and that that is not something that you hear all the time when you’re thinking about a business like sweet green looking continue to continue to scale and that really being factored into how analysts are looking through that opportunity as well as the mix of one of the headwinds that you were mentioning students saying, all right, well, we’re paying back these loans, we can’t buy, you know, a $20 salad at the same clip we used to.
06:45 Alexandra Canal
Right.
06:46 Speaker A
06:47 Alexandra Canal
And their loyalty program too. I feel like they rushed that and maybe they’re pulling back a bit. I went to Georgetown where these founders are from. I went to the original sweet green and back in the day, it actually was so much salad, way more than you get today. And they used to have froyo and you have the option of making a wrap. None of that exists now. The salads are literally probably half of what we used to get back in the day. And you know, it’s one of those things where I start to think about the franchising of it all and how they’ve been having to pull back on costs maybe a little bit.
07:43 Speaker A
Wow. Yeah.
07:54 Speaker A
Right.
07:55 Alexandra Canal
Yeah.
07:56 Speaker A
You got to lean into the experience. I guess when you’re scaling like that, that is easier to replicate across so many other franchises.
08:06 Alexandra Canal
Harder when you want to grow.
08:10 Speaker A
Absolutely. Ali, that’s good to hear that you were around for the heyday of sweet greens.
08:15 Alexandra Canal
Listen, the inside scoop.