McDonald's Corp. (MCD) shares have fallen more than 12% this year, an accurate reflection of the fast-food giant's performance through the first eight weeks of 2018, according to restaurant checks performed by Credit Suisse analysts.
The firm spoke with three McDonald's franchisees across the U.S. before deciding to reduce its same-store sales forecast for the first quarter to 1.5% growth from its previous view of 3.5% growth. Wall Street has a consensus 3.6% comp growth forecast, according to Consensus Metrix.
The three franchisees blamed slowing sales so far this year on under-performance of the new $1, $2, $3 Dollar Menu, which was launched early in January, the tepid consumer response to the company's new Big Mac trio promotion, and winter weather that was than expected.
"We also believe MCD lost some momentum due to the supply outage for the new chicken tenders late last year. The supply problem has now been fixed, but the product has been slow to rebuild as MCD's marketing effort has been focused elsewhere," Credit Suisse analyst Jason West wrote.
Despite the bleak view for the current quarter, Credit Suisse did maintain its comp growth forecast for the rest of the year at 3%.
The reason for the optimism is that the firm said it sees a lower impact from weather going forward and better adoption of the new dollar menu. The firm also sees positives ahead from the launch of the company's fresh beef initiative.
Credit Suisse maintained its "outperform" rating on the stock but did lower its price target to $175 from $191. McDonald's shares were able to rebound from down more than 1% to close the day up 0.09% to $151.17.