On June 20, 2017, Tae Win writes on CNBC Investing:
McDonald’s shares hit an all-time high on Tuesday as Wall Street expects sales to increase from new digital ordering kiosks that will replace cashiers in 2,500 restaurants.
Cowen raised its rating on McDonald’s shares to outperform from market perform because of the technology upgrades, which are slated for the fast-food chain’s restaurants this year.
McDonald’s shares rallied 26 percent this year through Monday compared to the S&P 500’s 10 percent return.
Andrew Charles from Cowen cited plans for the restaurant chain to roll out mobile ordering across 14,000 U.S. locations by the end of 2017. The technology upgrades, part of what McDonald’s calls “Experience of the Future,” includes digital ordering kiosks that will be offered in 2,500 restaurants by the end of the year and table delivery.
“MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery,” Charles wrote in a note to clients Tuesday. “Our analysis suggests efforts should bear fruit in 2018 with a combined 130 bps [basis points] contribution to U.S. comps [comparable sales].”
He raised his 2018 U.S. same store sales growth estimate for the fast-food chain to 3 percent from 2 percent.
The analyst raised his price target for McDonald’s to $180 from $142, representing 17.5 percent upside from Monday’s close. He also raised his 2018 earnings-per-share forecast to $6.87 from $6.71 versus the Wall Street consensus of $6.83.
“MCD has done a great job launching popular innovations within the context of simplifying the menu, while introducing more effective value initiatives that have recently begun to improve the brand’s value perceptions,” he wrote.
Gary Reber Comments:
This is yet another recent article that looks at a future where there will be hordes of citizens of zero economic value as tectonic shifts in the technologies of production destroy jobs and devalue the worth of labor. That is, unless the system can be reformed to empower EVERY citizen to acquire OWNERSHIP in the wealth-creating, income-producing capital assets resulting from technological invention and innovation that will transform the future.
Using common sense, if raising the minimum wage will not kill jobs then why not raise the minimum wage to $25.00 or $50.00 or $100.00 per hour? McDonald and other fast food establishments have other ways to combat minimum wage increases – further digitalization and automation. Of course there are consequences that either are reflected in job elimination or increased prices. In this case, the mobile digital ordering kiosks will replace workers throughout the McDonald empire, and as well prices will be increased, as has been occurring.
Virtually never are the OWNERS of corporations willing to reduce profits. If wage levels were not a factor there would be no reason for ANY company to unnecessarily automate or exit production in the United States and move production to foreign lands with significantly less labor costs. Also, there is the impact on pricing levels, as any increases in the cost of production or service always results in pricing increases.
If this were not the case, then no companies would be compelled to seek other more cost-efficient means of production or to move production to foreign countries whose workers are paid far less than Americans. Increasingly, companies are seeking more efficient and less long term costs that non-human technology can deliver to reduce their operating costs, provide higher build quality, automate service, and maximize profits for their OWNERS. As is virtually always the case, the OWNERS of companies do not want to reduce profits.
What the proponents of raising the minimum wage fundamentally are addressing is that low-paid American workers need to earn more income.
Rather than focus on Job Creation, Job Retraining, and a redistributed Minimum Guaranteed Income that holds back technological invention and innovation, our economic policies should focus on wealth-creating, income-producing capital Ownership Creation.
Given that there is no question that robotic technology will continue to expand the productivity and in large measure destroy jobs and devalue the value of human labor, the question that SHOULD be urgently addressed is WHO SHOULD OWN THE FUTURE TECHNOLOGY ECONOMY? Will ownership continue to concentrate among the 1 percent wealthy ownership class who now OWNS America, or will we reform the system to provide equal opportunity for EVERY child, woman, and man to acquire personal OWNERSHIP in FUTURE non-human capital assets paid for with the FUTURE earnings of the investments in our technological future?
