The McDonalds Corporation’s introduction of ancillary products, such as lattes, smoothies and oatmeal, will hurt its profits in the long run, Howard Penney, a restaurant analyst at Hedgeye Risk Management, told CNBC Wednesday.
“If you think about a typical McDonalds commercial, it focuses on the beverages, the hot coffee, the lattes, the smoothies, the frappes and takes away from the core business,” said Penney, who has followed the fast-food company for 18 years.
“This is a burger company. The pendulum has swung a little too far.”
Penney said that it’s unlikely that a customer set on a $1 breakfast will up her or his order by $2.50 to buy a latte. He added that, while the introduction of new products has increased store traffic, the introduction of snacks has brought the average price of a McDonalds check down. He said that once customers get used to lower prices, it will be harder to get them to spend more.
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where's the US Dollar Today?
- Track Treasury Prices Here
CNBC Slideshow: 15 Major Fast Food Failures
CNBC's Companies in the News:
Disclosure information was not available for NAME or his company.