Is McDonald’s A Gold Medalist At the Olympics?

The popularity of the McDonald’s (NYSE:MCD) restaurant in the Olympics village at Rio de Janiero, Brazil is visible from the long queue of athletes outside the store, practically at all times during the day. The Washington Post reported that several athletes including the Chinese basketball team visit the restaurant almost every day. While this is being partly attributed to the fact that there are very few other alternatives in the Olympics village and McDonald’s is offering free food to athletes and coaches, it is an indication of the global popularity of the fast food joint. We believe the crowds at its outlet in the Olympics village and the consequent media coverage (including social media posts by the athletes) will work in McDonald’s favor, especially at a time when the company is working on its turnaround plan and also focusing on healthier menu items.

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Popularity With Athletes Can Increase Traffic At McDonald’s Stores

As athletes throng the McDonald’s store at the Olympics village, its popularity with sports stars and consequent media attention can lead to an increase in the number of visits at its other stores. Consumers are likely to follow the trend set by their favorite Olympians and try to “eat like them “at the nearest McDonald’s. This can work as an effective marketing strategy for the company.  While some athletes are celebrating after their Olympic performance at McDonald’s — eating junk food after months of disciplined eating — others are opting for the joint only because it is the only American food available in the village. The reason for the crowds at McDonald’s might transcend its popularity and the free food could be a factor as well. Still, images of long queues of Olympians outside the McDonald’s  outlet is sure to work as a great marketing tool. Junk food might not be the best diet for the players, we concede.  However, these crowds can also highlight McDonald’s initiatives on healthier menu options as well.

Annual customers per McDonald’s restaurant is a key driver of its valuation and we expect this number to remain steady at around 638,000 customers throughout our forecast period.

However, if this number increases steadily over our forecast period and reaches 700,000 by the end of our forecast period there can be a nearly 10% upside to our price estimate.

McDonald’s is definitely getting a lot of publicity during the Olympics and its marketing efforts in terms of free food for athletes seem to be showing results. Whether this will translate into more paying customers at its stores will be visible in the next few quarters.

Image Source: The Washington Post

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