| Moderated By: Steve Borg -- (Not Moderated) -- Started: 3/2/1997 1:58:00 PM Revision History |
This little stock was coming back nicely before the McDonald's announcement that they are trying to lower the price of a Big Mac to 55 cents, and Barron's stated that this will hurt little guys like Rallys and Checkers. It seems to me that McDonalds' Big Mac is not a direct competitor in Rallys' market. Rallys' direction has been a "Bigger, Better Burger" campaign, in the same market as CKE (Now one of Rallys partners) Wendy's and Burger King. If McDonalds was a threat to this market, it was with their attempts to enter it with such offerings as the Arch Deluxe, which seem to have fizzled (If you tried one, you know why). I should know better than to disagree with Barrons, but I just don't think McDonalds' cheaper Big Mac demonstrates a threat to Rallys. Rather, it seems to be an act of desperation by the former catagory killer, who seems to be unable to figure out how to match the quality and value of the other fast food guys. It looks like they've given up on trying to match the quality, so their trying to go even cheaper to stem the loss of market share. As a customer, you either like a Big Mac or you don't. If you like it, you'll be happy to keep buying them at a cheaper price. If you don't like them, you wouldn't eat one if they started giving them away.
With Rallys under $3 (down from a recent high of $5), it looks like a buying opportunity in a turn around company. Any thoughts?