👉 Background: McDonald’s is the world’s largest fast food chain, with its delicious nuggies, McFlurries and regretful late-night cheeseburger runs. They’ve been flipping burgers since 1940 and now operating in over 100 countries.

‍👉 What happened: But lately, the golden arches have been looking a little... tarnished. McDonald’s has reported a 3.6% dip in same-store sales. This is the second quarter in a row that they’ve suffered a dip. In fact, this was its worst sales drop since the 2020 lockdowns (when even Ronald McDonald was working from home).

‍👉 What else: In the last quarter, Maccas blamed the dip on lower-income groups cutting back. But the real kicker is that even middle-income consumer are cutting back in this quarter. Clearly, there is even more economic pressure now - and not even their new value menu or Minecraft Movie promo could stop the fall. This once “recession proof” stock might be losing its title.

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‍What's the key learning?

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‍💡In tough times, brands that are typically ‘recession-proof’ are suddenly under pressure. McDonald’s has always been known as a “defensive stock”.

💡The idea is that even when budgets tighten, people still grab a cheap meal from Maccy D’s. Other defensive stocks are typically companies in the utilities and consumer staples industries like Coca Cola (Warren Buffett’s favourite) - because people have gotta eat and people have gotta use electricity.

💡But this quarter shows that even McDonald’s isn't immune from the cost-of-living. So, it’s a wake-up call that so-called “recession-proof” stocks aren’t bulletproof.