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MCD - Golden Arches or Fool's Gold?

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May 04, 2013 – Comments (3) | RELATED TICKERS: MCD

Over the years, I have become disenchanted, both as customer and potential investor.

Ronald McDonald has introduced several new dishes in his kitchen: salads, flavored coffees, wraps. At each step TMF has cheered: is McCafe a threat to SBUX, they are appealing to health conscious people with their salads, they will attract millenials with trendy things like wraps.

What nonsense.

I do not pass under the golden arches for flavored coffee or health food or the latest culinary trend. The burgers are not as good as WEN, BKW, or even JACK. I go there for only one reason: speed of service. Each time they introduce yet another new item, it sure seems as if the service slows down. You place your order at the cashier, then step over to the other side of the counter with receipt #, and wait for an expeditor to assemble your order. Over the years, this wait has gotten longer. I do not know if this has to do with a menu with too many items, but it sure seems like it.

In the old days, service was instantaneous. There was a giant heat lamp with only 4 items: burger, cheeseburger, filet o' fish, or big mac. The cashier would simply turn around, grab your choice then fries and drink. Voila.

I am an old fogy and remember those days, and I think that MCD has lost its way and no longer has focus.

No, I am not foolish (small “f”) enough to give it a thumbs down, but neither am I foolish enough to invest in a company whose best days are behind it.  

3 Comments – Post Your Own

#1) On May 05, 2013 at 7:14 PM, chk999 (99.98) wrote:

MCD's return on equity is really pretty good and has risen a bunch over the last decade. They may make some menu bobbles, but that is fixable. This is something I plan to keep a close eye on the next time Mr. Market has indegestion.

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#2) On May 06, 2013 at 9:55 AM, NewAlchemist (50.20) wrote:

Wendy's food is much better than McDonalds but a lot of McDonalds are open 24-7 or at least for breakfast.  McDonalds breakfast is huge, easily the best fast food breakfast out there.  They can better utilize their fixed assets compared to Wendy's that are open from 11AM or so until 1 or 2 AM or so.  Would you rather be making money 24 hours per day or 13 hours per day?

Jack?  I don't live on the West Coast but last time I was there they were serving breakfast all day.  How does that speed up the ordering process?

McDonalds is probably my least favorite fast food but as an investor it is the best run fast food enterprise out there.

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#3) On May 06, 2013 at 4:01 PM, JaysRage (90.12) wrote:

McDonalds has moved along with the tastes of their customers. Coffee, oatmeal, wraps.....etc.    Most take credit cards, have double-drive-thrus and a lot are moving to 24-hour.  If you have kids, they are REALLY easy and predictable, which is very important in the kid sphere.  They are still BY FAR, the best run restaurant franchise on the planet.  

There will always be restaurants with better food or better service or that meet one particular need better, but McDonalds is darn good at what they do, and they have done a great job remaking their menu.  

They are not a competitor to Starbucks, but coffee and specialty drinks have been AWESOME for their bottom line.     

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