McDonald's(US:MCD) CNBC Television·2025-09-02 17:14Tariffs & Trade - A federal appeals court ruled President Trump's tariffs illegal, potentially leading to a Supreme Court showdown [6][7] - The ruling impacts country-specific tariffs against China, Canada, Mexico, and approximately 70 other countries, but not sector-specific tariffs on metals, cars, semiconductors, and furniture [9] - If the Supreme Court sides against President Trump, new tariffs would need to be implemented, potentially requiring Congressional approval [11] - A key question is whether the administration would have to refund tariffs already collected [13] McDonald's Value Strategy - McDonald's is launching extra value meals, including a $5 sausage McMuffin meal and an $8 Big Mac meal, to address a gap in value for customers not using the app or McValue deals [44][45][46] - The company recognizes a two-tiered economy where middle and lower-income consumers are under pressure, leading to decreased traffic and skipped meals [53][54] - McDonald's is implementing a "value ladder" strategy, offering entry-price point items for budget-conscious consumers and premium items for those willing to spend more [56][57] - Snack Wraps are back permanently at $2.99 [58] McDonald's Franchise Health & Operations - Franchises have faced cost pressures due to food, packaging, and labor cost increases, with California introducing a $20 minimum wage for restaurants with 60+ locations [64][65] - Despite cost pressures, franchises are generally doing well, outperforming competitors, although some markets like California face more pressure [66][67] - McDonald's is co-investing with franchises in the extra value meal program to alleviate cost pressures [67] - The company uses data to monitor restaurant performance and works with underperforming franchises to improve [69][70] AI & Content Moderation - Open AI is rolling out new guard rails for Chat GPT following a tragic use case involving a 16-year-old's suicide [21][22] - Open AI will prioritize expanding interventions to more people in crisis, making it easier to reach emergency services and expert health, enabling connections to trusted contacts, and strengthening protections for teens over the next 120 days [25] - The company is rolling out new parental controls this month [26] Kraft Heinz Restructuring - Kraft Heinz plans to separate into two companies: "Global Taste Elevation" (including Heinz, Philadelphia Cream Cheese, Kraft Mac and Cheese) and "North American Grocery" (including Oscar Meyer, Kraft Singles, and Lunchables) [16][17][40] - The deal is expected to close in the second half of next year [17][41] Minimum Wage & Tipping - McDonald's supports no tax on tips but notes it only benefits restaurants with tipping, unlike McDonald's [75][76] - The company advocates for a level playing field regarding minimum wage, suggesting that all states should have the same minimum wage for tipped and non-tipped employees [78][79] - McDonald's is open to conversations on raising the federal minimum wage and is in constant dialogue with the administration on various topics [79][80] Global Brand Perception - McDonald's is tracking how the rest of the world views America and American brands, noting that the aura around America may have dimmed in some markets [85][86] - Despite this, consumers in those markets report that it hasn't affected their visits to McDonald's [86] - The company is focusing its marketing efforts on local communities to emphasize its locality [89][90] Growth Opportunities - Chicken is a significant growth area for McDonald's, with chicken being two times the size of beef and growing faster [81] - The company is testing new beverages, including energy drinks and cold brew coffee, in 500 restaurants [83] - China continues to be a big growth market for McDonald's, with plans to build a thousand restaurants a year [93]