McDonald's (NYSE:MCD) was cut to Hold from Buy at Argus on Monday, with analysts noting the company's prospects for weak consumer traffic.
The investment research firm believes McDonald's sales have been hurt recently as more customers choose meals at home over dining out.
On March 13, at an industry conference, McDonald's said consumers' preference for meals at home over dining out is likely to have negative consequences for its business, noted Argus. "The company's CFO said that both MCD and the restaurant industry are likely to see customer traffic decline in 2024," they wrote.
"The reason for the switch is that food price inflation is moderating while the cost of dining out has been spiking," explained the firm. "As such, some consumers who had chosen to dine out amid rising grocery prices are deciding to eat at home more often."
Despite the near-term cautious view, Argus said that McDonald's geographically diverse locations, share buybacks, and dividend hikes are reasons long-term investors should own the shares.