MCD investors reacted negatively to the 'McDonald's Next' plan details due to high capex burdens on franchisees, causing a significant stock decline.

McDonald's shares rose today after facing a tough day yesterday following its first investor day in nearly 3 years. It seems that despite setting strategic plans and financial targets, investors were not very impressed by their statements , especially regarding the macroeconomic outlook and the huge amount of money they would have to spend on franchises.

In fact, McDonald's is doing better than others and is trying to make up for the losses it suffered yesterday. Yes, there was a loss of about 6% yesterday. This comes after the release of details of the ' McDonald's Next' plan, which they announced in June but at the time was very sparse on details.

Now that investors have learned the details, as you said, they did n't like it very much. We are seeing a slight price increase today, not even 1 percent, so it is not fully covering yesterday's losses.

Let's discuss why they are changing strategy and what their new strategy is. They plan to modernize the restaurants. They are looking for different ways to attract GLP-1 users.

This is a big part of their strategy. Their sales have been sluggish for a long time as consumers have been hurt by high inflation. We are seeing that people are going to restaurants less than before everywhere.

But they are looking for ways to get diners back. So now they are planning some remodeling or renovations. This is a big part of their strategy.

McDonald's makes this mandatory for franchisees every decade, but this time they have some new designs. They are bringing back the playground. McDonald's that already have play places are updating them.

They are creating an open kitchen or open kitchen layout. They want McCafe's drinks to feel like a Starbucks-like barista experience. Consumers will be able to see the beverage making process directly , as they are placing more importance on the beverage market.

They see it as a major driver of business. They will also improve their equipment, technology, and operations. They have a new artificial intelligence- powered operating system that can take orders from customers in Spanish and English.

It can handle inventory and shift scheduling tasks, and its functionality will save about 50 labor hours per week, they said. So they are adding it. This will require a large financial investment, and I think this is where the calculations get a little complicated.

Typically, franchise owners are responsible for any upgrades to McDonald's franchises. So they want everyone to make these upgrades. The cost of this upgrade or remodeling is typically $ 400,000 to $450,000, but when I look at the average annual cash flow of US franchise owners , it's currently around $500,000.

Therefore, the possibility of resistance from franchise owners is very high here. They plan to provide franchisees with about $5 billion in support as they make this strategic change.

Capital expenditures are projected to be $1.5 to $2 billion from 2027 to 2030, and an additional $3 billion in recurring capital expenditures or capex each year thereafter. They spent about $3.4 billion on capex in 2025.

Another interesting thing is that they are planning to build a media network. I'm not sure where this fits into the equation, but they will advertise other businesses in their digital drive-thru.

They say it could become a billion-dollar business and they have started its pilot operations. However, this is not mentioned in any analyst report I have seen.

TD Coyne raised its price target on McDonald's to 282 from 270. This means that there is still a possibility of an increase of about $30 from the current position. Their rating is 'Hold'.

They say the stock is currently trading at 17 times forward earnings. This is the lowest since 2016, excluding the post-Covid period. This indicates that not much is needed to achieve alpha, although the recovery timeline is still unclear.

They also called EPS growth from 2027 to 2030 unclear.

Evercore ISI has reduced their target from 320 to 300. However, they maintain an ' outperform' rating and still see significant room for improvement. They said they cut their EPS for 2027 to 2030 by 3% , which they attributed to lower estimates for re- franchising , rent reductions and same-store sales.

And in JP Morgan's latest note today, they maintained their ' overweight' rating but cut the price target to 260. That means it is only a $20 difference from the current level.

They said McDonald's is demonstrating its rare, if not unique, ability as a global franchisor to create effective operating platforms. So, the sell- side has n't been affected much, but they don't seem to be averse to this new strategy , Sam.

How do you place a potential trade on McDonald's? Yes, thank you for inviting me. Look, usually things happen in the markets every day , and we have confusing discussions about high interest rates and rising costs for people.

Usually, when you hear these things, it seems like people are probably trying to save money and looking for cheap ways. And you might think of companies like McDonald's, but their future doesn't seem very promising as an investor.

Despite all this, I think they are probably projecting the worst-case scenario and aiming to do better going forward with low expectations. Considering the stock's current position, it's showing a pretty good bounce from the bottom today.

I think this is very encouraging. Today, buyers are returning here. However, given the current situation, the volatility is a bit higher than normal. The stock price is slightly lower than normal.

I am thinking of trading by selling a put spread. This will give me a specific risk for their income event. I'm looking at the 230-215 put spread for October. Currently it's about a dollar, it was a little higher when I looked this morning.

It is possible to get a premium of about one dollar from this. This is a very comfortable place for me, about $10 below the current price of the stock. So, if the price drops further , I have to buy the stock.

I am willing to buy the stock at $230. Otherwise, I'll get my one dollar premium, which isn't too bad of an income for the next three weeks.