Everyone talks about McDonald's like they are doing something wrong, but as evidenced by the recent strong performance of the stock price, they are doing exactly what Wall St. expects, which is to provide mass-produced , uninteresting food to billions of consumers all over the world, which is a very profitable business and they have returned billions to shareholders in the form of a very high dividend. You cannot compare McDonald's with Chipotle or Shake Shack..it's a completely different business model and economy of scale. McDonald's is not dead, dying , or going away..they are just being McDonald's, that all.
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Not sure what recent strong performance you're referring to. Here's a comparison against the S&P 500 for the last 5 years:
http://finance.yahoo.com/echarts?s=MCD+Interactive#{"compari...
That chart understates the cumulative return of McDonalds by 20%, since it is just a graph of price appreciation and does not include the effect of reinvesting dividends. The proper cumulative return for McDonalds over that time period is actually 64.7%, assuming reinvestment of dividends.
MCD only has a slightly higher dividend yield than SPY. His graph doesn't misrepresent MCD's relative performance.
Actually McDonald's is not doing that. They're food sales has been suffering the last several years and the article is all about the other means they've been using to expand their market cap and "increase shareholder value". It's not dire straights, yet, but they have been losing market share consistently and this specific industry is constantly under threat from upstarts like the ones you mentioned.
I can give my anecdotal position that this isn't the case in Australia. McDonald's is steadily increasing their prices and still completely dominating the fast food industry, more and more every year. At any time of the day there is at least a five to ten car queue at my local store, and they have effectively forced Hungry Jacks (Burger King) into -- more or less -- giving their food away for free.
I noticed that about Japan as well, there was a line out the door for McDonald's when I was in Osaka a few years ago.
Part of the difference is experience: your typical American major-city McDonald's is ill-maintained and staffed by unpleasant people, the food being terribad is just the icing on the shitcake and given how few fucks seem to be given about service quality or cleanliness, the chances it'll give you salmonella are probably much higher. Quite different from the magical wonderland where hamburgers grow on trees we were sold on by the 1980s television commercials.
In Japan, cute 20-something girls take your order and serve your food with a little Handi-Wipe to clean up with after you're done. The restaurant is spotless and though a Japanese Big Mac tastes identical to an American Big Mac, you don't feel like it will give you food poisoning. From my limited experience with Australian McD's it's much the same and they turn into trendy little hangout spots.
Everyone talks about McDonald's like they are doing something wrong, but as evidenced by the recent strong performance of the stock price, they are doing exactly what Wall St. expects
And consequently that implies people believe the expectations of Wall Street are wrong, or at least not in line with what the majority of people believe is right. I think that's probably true.
> as evidenced by the recent strong performance of the stock price
Any "strong performance" may only be a result of the stock buyback -- which serves to inflate share prices by creating demand for the stock not by virtue of the value of the business, but by promising to extract further value from the business and give it to stock holders via dividends and buybacks. Quoting the article:
>"...its executives can do up to $8.1 billion in buybacks in 2015..." and "...to help finance the plan...[McDonald's would] take on more debt..."
As noted in the article, they paid out 134% of net income in 2014 -- so it's probably not the strength of the business that's driving demand.