The leading face of consumerism is changing … and perhaps more so than any other company on the planet, McDonald’s is charting that new consumer’s course.
For years, the U.S. of A sat at the head of the table for the burger behemoth. But just recently McDonald’s announced an historic change that says so much about the company’s future … and ours. Ronald and Crew told the world that the company would begin closing more stores in the U.S. than it opens.
The underlying message is shocking in its undeniable clarity: The U.S. is no longer the consumer market it once was with the investment opportunities it once had. We’re now on the downslope of history while the non-Western world ramps up. And that is all you need to know to find your future investment opportunities.
Because the future is not in America…
I don’t say that to bash my country. It just is what it is.
The U.S. economy is too big to grow at a quick pace. Business and entrepreneurs are too burdened by onerous legislation imposed through the years. Personal income has been falling for a decade, government data show we are replacing high-paying jobs with low-paying menial labor, and all the latest statistics show the American middle class is actually shrinking.
That’s not a world in which a consumer-product company such as McDonald’s thrives.
That’s a world, actually, in which consumer sales stagnate or even shrink. Indeed, McDonald’s has been reporting quarter after quarter of slowing sales and declining guest traffic in America. Some of that, of course, is a switch to healthier lifestyles … but a good deal of it is also a middle-class consumer increasingly pinched and increasingly slipping down the ladder of success.
So, for the first time in 40 years, McDonald’s is closing more stores than it opens in order to right-size its business with the America of the future.
Yet, while investment opportunities are shrinking in the U.S., the firm has set its sights on expansion into high-growth markets out of the U.S. In their 2014 Annual Report, MCD announced that it would open 250 new restaurants in Europe, with it specifically aiming to spend 200 million euros ($220 million) in France for expansion because the company continues to see high demand and customer growth in the country.
Across Asia/Pacific, the Middle East and Africa, MCD is planning to open 550 new restaurants, with 200 additional eateries slated for China alone.
In fact, some of the high-growth markets Ronald McDonald highlighted include China, Poland, Russia and South Korea.
The market has simply shifted away from America.
It’s natural. All economies go through their cycles of emergence, growth, stagnation and decline.
We’re on the backside of the cycle in America.
Which is why I always say that the status quo is never static … and the idea that America will forever reign atop the leaderboard of global economies is, at best, naïve — and, at worst, disastrous to your investment portfolio.
Search for the Next Investment Opportunities
Though I am not a proponent of investing in multinationals as a way to gain exposure to global markets (they are not pure plays on the explosive growth and investment opportunities available in specific markets), they are great weathervanes pointing you in the direction of future profits … or, as the case may be, away from future decline.
And that’s exactly the message McDonald’s has sent.
America, for all her greatness, has plateaued. The “American consumer,” for all it has accomplished, is about as big as it will ever get — and it very well could get smaller.
Simply put: The future is not here.
It is elsewhere.
As an investor you can see where you should be looking for investment opportunities by watching where companies such as McDonald’s are shifting their focus.
Go there, and large profits await you.
Also, I’ve been working hard behind the scenes on a new opportunity and I’m excited to finally bring it to readers after months of research and testing. Watch for an announcement next week!
Until next time, stay Sovereign…
Jeff D. Opdyke
Editor, Profit Seeker