McDonald’s Snack Wrap Return Feeds Wall Street Fast Food Optimism As Stock Gets Goldman Upgrade
Topline
Enthusiasm for McDonald’s resurrection of the fan favorite Snack Wrap made it all the way to Wall Street, as shares of McDonald’s rose after one prominent firm upgraded its rating for the fast food giant.
The Snack Wrap is back after nearly a decade, much to Wall Street’s delight.
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Key Facts
The Snack Wrap, which features a chicken tender, lettuce, cheese and ranch dressing in a small flour tortilla, returned to McDonald’s franchises nationwide Thursday, nearly a decade after leaving the nationwide menu in 2016.
Investors joined in on the fanfare, as McDonald’s stock climbed 2%, far outpacing the S&P 500’s 0.3% gain, by midafternoon Thursday, hitting a three-week high of more than $300 per share.
Catalyzing the rally was Goldman Sachs analysts commemorating the Snack Wrap’s comeback by upgrading their rating on McDonald’s stock from neutral to a buy.
McDonald’s is “firmly committed to market share gains through product and marketing innovation (including return of snack wraps),” the Goldman group led by Christine Cho wrote in a Thursday note to clients.
Big Number
$5 billion. That’s how much market value McDonald’s added Thursday. That’s equivalent to 1.7 billion Snack Wraps sold at $2.99 apiece.
Key Background
McDonald’s is by far the most valuable publicly traded restaurant company by market capitalization and sales, with more than 43,000 locations worldwide as of March. The Chicago-based hamburger hawker announced June 3 it would bring back Snack Wraps. Goldman is not alone on Wall Street in its excitement for the Snack Wrap, as UBS analyst Dennis Geiger wrote to clients last month “menu innovation” including the “benefit from Snack Wraps” should give a “notable” boost to second-half sales for McDonald’s. The Snack Wrap jolt is much needed, as McDonald’s has reported negative same-store sales growth in three of the last four quarters, a worrisome trend considering the company hadn’t posted a negative reading in that metric since 2020. Consensus analyst forecasts call for 2.5% same-store sales growth for McDonald’s most recent quarter, according to FactSet, which would be the strongest reading since 2023.
Tangent
McDonald’s headed a strong day for restaurant stocks, as fellow fast food or fast-casual chains Cava, Chipotle, Shake Shack, Wendy’s and Taco Bell parent Yum! Brands, all enjoyed at least 1% advances.