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CramersPosse Sam Young Jason Linder Alex Vong. Company Profile First McDonalds opened 1940 in San Bernardino, CA (Dick and Mac McDonald) Speedee Service.

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Presentation on theme: "CramersPosse Sam Young Jason Linder Alex Vong. Company Profile First McDonalds opened 1940 in San Bernardino, CA (Dick and Mac McDonald) Speedee Service."— Presentation transcript:

1 CramersPosse Sam Young Jason Linder Alex Vong

2 Company Profile First McDonalds opened 1940 in San Bernardino, CA (Dick and Mac McDonald) Speedee Service (1948) set standard for fast food First franchised restaurant opened 1955 => Founding of the McDonalds Corporation Today: Headquarters: Oak Brook, IL 31,000+ locations worldwide >1.5 million employees >$20B annual revenue

3 Key Statistics (Stock) 52wk Range$ $63.69 Avg Vol (3m)7,767,640 Market Cap$69.03B P/E (TTM)27.52 EPS$2.15 Div & Yield$1.50 (2.50%) 1y Target Est$64.70

4 Business Overview Franchises the majority of its restaurants Franchises generate revenue for the corporation through rent, commissions, and initial fees Avoids having to invest a significant amount of capital in its restaurants

5 Business Overview (contd) Three main business strategies: 1. Predicting and responding to changes in consumer tastes and preferences, demographics and spending patterns. Adjusts menu accordingly 2. Maximizing sales at existing restaurants Remodeling restaurants, increasing kitchen efficiency, streamlining drive-thru ordering 3. Opening new restaurants About 1,000 new units planned for 2008 Total number of restaurants growing at 1%-2% per year

6 Business Financials Year Total Revenues$22.8B$20.9B$19.1B Company- operated sales $16.6B$15.4B$14.0B Franchise/Affiliate revenues $6.2B$5.5B$5.1 Franchise/Affiliate sales $46.9B$41.4B$38.9B Operating Income$3.9B$4.4B$4.0B

7 Industry Analysis Industry: Restaurants; Consumer Discretionary Goods Food and dining experience Demand varies with disposable income Substitute with home-cooking Sensitivity related to opportunity cost

8 Competitors Company- operated sales Operating income Company- operated restaurants Franchised restaurants Sales per restaurant P/E (TTM) MCD$16.1B$4.45B8.79K18.7K$1.83M27.52 WEN$2.16B$42M1.47K5.21K$1.4M30.19 YUM$8.37B$1.26B7.74K23.5K$1.08M21.70 BKC$1.66B $291M1.3K9.98K$1.19M21.93

9 Stock Performance

10 Stock Performance (contd)

11 Technical Analysis Buy signals

12 Technical Analysis (contd) Buy signals Sell signals CramersPosse purchased MCD on 4/28 Perhaps too late…

13 Strengths Many locations International presence Perpetual demand for fast food Reliable, quick, efficient, CHEAP Dollar menu especially popular Wide variety of foods to appeal to a wide range of consumers

14 Weaknesses Serves largely unhealthy food (see Threats) Dining experience not special Ubiquity Convenience food, not pleasant dining experience Diminishing returns to operating single brand? New types of restaurants needed?

15 Opportunities Spin-off brands New restaurants offering richer, more satisfying customer experience Economies of scope advantages? Healthier products Compete with Subway and healthy fast food alternatives

16 Threats Health concerns Public becoming more health-conscious about food Bad publicity about McDs and health Super Size Me, Fast Food Nation Competition Competitors eating into profit margins through promotions and value pricing strategies Smaller fast food restaurants growing in popularity (e.g., In-N- Out, Sonic)

17 Recommendation Recommendation: Hold McDonalds has a tried and true business model with a strong international presence. It is very solid for those reasons. On the flipside, its maximum growth potential may be limited (extensive, rather than intensive growth).


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