They aren’t busy clowning around as the kingpin of burgers and fries. Home of the Golden Arches —Your neighborhood’s local “Safe Place” for kids and anyone — Birthplace of Ronald McDonald House Charities — Host of PlayPlace … It would be wrong to call them traits. They are exhibits. And on the whole, McDonald’s (MCD) has them all.
This is the real McDonald’s, and it’s fun. It’s a tasty meal, or even one of a number of healthy meals. It’s also about children and a place for them to play, And it’s also a charity and a die-hard stock to invest in. It’s also any dinner-off for the cook of the family.
Today, McDonald’s enhances name & image by serving breakfasts with fruit & yogurt. Chicken sandwiches on whole grain buns are also served. There is also fruit & nut salad and oatmeal, apple dippers, a number of wraps, and ten salads too. And then there are the smoothies, frappes, and iced coffees of McCafé. The longstanding restauranteur seems poised to prosper for the next decade, but then we’re only getting started.
Performance
In January 2007, MCD was only in $40 range. By the end of the year its stock had peaked to $60. It tugged barely in 2008 and 2009 — and in 2010 rose from January by December to $80. From 2011, the trend remained except for sinking in Q1 to about $76, but by H2 it sped past $80 on its way to $100 where it stands today. The company’s last major dip was January 2, 2003, where stock prices had stumbled down to $14.46 from a previous high of $45.31 on January 4, 1999. At the moment, McDonald’s claims only 14% of a $420 billion food service market, reported in a recent SYSCO (SYY) study and recapitulated in the recent Q3 conference call. MCD also earned recognition as Dow Jones’s (CMX) “Best Performer” for 2011.
Today, MCD management engineers the company’s performance like a roller coaster traveling around a safari sideshow. The recent Q3 saw earnings per share at $1.45 with a 6% increase, with each market throughout the globe showing an average of 5% growth in same-store sales.
Hi-lights
McDonald’s is a 33,000-strong global chain of stores, 80% franchised, profiting deliberately from those franchise margins. They serve 64 million customers daily. Despite increased operating expenses, revenues rose during the first nine months of the FY 2011. MCD is also known for paying investor dividends. The Q3 dividend was $2.80 per share and has increased annually since 1976.
The corporation is also invested in the Olympics and has recently extended its sponsorship for now until 2020, busy with selling kids on the idea of balanced eating and fun, active lifestyles with new plans percolating. The upshot of the company’s sponsorships supports active involvement of kids in local, state and national physical fitness programs in cooperation with sports organizations. There are also explicit sponsorships in the Canada, the USA, UK, and South Korea. More is to come at ChampionsOfPlay.com.
Multi-record breaker and gold-class Olympian “Lightening Bolt,” Usain Bolt of the U.S. territory of Jamaica, claimed that Chicken McNuggets deserve credit for being his last meal before gaining title to “world’s fastest man” for his 9.69 second 100 meter run in Beijing in 2011. The fact somewhat assuages Silver-class Olympian boxer Amir Khan’s dismay at the new & largest McDonald’s site worldwide at London’s Olympic Park.
Forecasts
Jim Jubak, writing as the senior markets editor for MoneyShow expounds in his January 13, 2012 article, “5 ‘Black Swans’ We Could See in 2012,” on five bad possibilities for 2012, one of which that could in fact benefit McDonald’s and partner CocaCola (KO) alike. Citing that the United Nation’s Food & Agriculture Organization reports a drop in the food price index that may confer lower food costs in grain and corn. These crops incidentally feed chicken and livestock, with potential vis-a-vis the precedent’s low not seen in over a year that could signify help for these companies to leverage competitive advantage.
Strategy
Expansion is only part of McDonald’s consumer popularity strategy. Its most recent foreign market is located in Russia, China, the Pacific and Europe. In 1995, MCD expanded into South Africa, setting a record with 30 new store openings in just under two years. …
Formal strategy, referred to as Plan to Win, consists of orientation to the 5 P’s — People, Products, Place, Price and Promotion for general success. Additional emphasis has been placed on menu, experience, & accessibilty as global goals. Store remodeling and tech upgrades are also being introduced. Globally, hours of operation are on the increase.
MCD has also introduced delivery as well as self-ordering kiosks, drive-thru in two lanes, and extra amenities for parents of children — in effect changing the brand and improving accessibility. Product lists look positively McGreat online.
Competition
Some observers are keen to point out that Chipotle Mexican Grill (Burger King has introduced home delivery in the USA, now emerging at 20 stores nationwide. Competitor YUM! Brands (YUM) has expanded into Africa. Meanwhile, Wendy’s (WEN) has found out how to save $100 million per year. And McCafé competes with Starbucks coffee (SBUX). Steak n’ Shake (SNS) recently made a delightful New Year’s Resolution not to raise food prices in 2012.
The five P’s plan and global plan, the objective is to keep winning. Prospectus is high for MCD, with little detraction. Underpenetration describes the overall market, and competition is gentle. There are no threatening signs yet of MCD being upstaged, though expansion represents similar efforts underway for CMG, WEN, and YUM. Some say McDonald’s is an overpriced stock, but then it is the Boardwalk of food service. The truth is that the stock is well-stoked to surge further before disaster strikes and still represents a promising though expensive gamble at over twice what the nearest competitor’s stock has been selling for.