McDonald’s Corporation (MCD) is a Global foodservice retailer that operated and franchised a total of 40,275 restaurants worldwide in 2022, up from 40,031 restaurants in 2021. The company has seen a year-over-year increase in restaurants for the last 17. Market-share leading quick service restaurant (QSR) with over 40 000 restaurants, $88bn systemwide sales, and $23bn revenue globally.
McDonald's Technnical Analysis
Historical daily share price chart and data for McDonald's since 2019 adjusted for splits. The latest closing stock price for McDonalds as of July 05, 2023, is $295.
McDonald's 1000 trading days stock distribution
Breaking down and examining the percentage changes for each month for the year 2022. Volatility, the stock price of McDonald's appears to have experienced significant volatility throughout the year. Large positive and negative percentage changes indicate substantial fluctuations in market sentiment and investor perceptions. Overall Performance, while there are periods of positive performance, such as March, April, May, July, and October, there are also significant declines in other months, such as February, June, August, September, November, and December, and improved in last six months.
How does McDonalds Make money ?McDonald’s franchised restaurants are owned and operated under one of the following.
The Company is primarily a franchisor and believes franchising is paramount to
Franchising enables an individual to be their own employer and maintain control over all employment related matters, marketing, and pricing decisions, while also benefiting from the strength of McDonald’s global brand, operating system and financial resources.
Directly operating McDonald’s restaurants contributes significantly to the Company's ability to act as a credible franchisor. One of the strengths of the franchising model is that the expertise from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, the Company is able to further develop and refine operating standards, marketing concepts and product and pricing strategies that will ultimately benefit McDonald’s restaurants.
The Company’s revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.
Under a conventional franchise arrangement, the Company generally owns or secures a long-term lease on the land and building for the restaurant location and the franchisee pays for equipment, signs, seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables it to achieve restaurant performance levels that are among the highest in the industry.
Franchisees are responsible for reinvesting capital in their businesses over time. In addition, to accelerate implementation of certain initiatives, the Company may co-invest with franchisees to fund improvements to their restaurants or operating systems. These investments, developed in collaboration with franchisees, are designed to cater to consumer preferences, improve local business performance and increase the value of the McDonald's brand through the development of modernized, more attractive, and higher revenue generating restaurants.
McDonald’s compound annual average growth rate since 2012 is unimpressed of -1.72 %. Continuously present in the international market operations are slowing significant to McDonald’s revenues and net income. International revenues accounted for approximately 61% of their consolidated revenues in 2022.
Sources of revenues: Sales per businessMcDonald's Corporation is the world's biggest fast-food chain. Net sales break down by type of restaurants as follows:
Franchised margins represented nearly 90% of restaurant margin dollars.
Total restaurant margin growth was negatively impacted in both periods by foreign currency translation due to the weakening of all major currencies against the U.S. Dollar. Franchised margins in the U.S. reflected higher depreciation costs related to investments in restaurant modernization. Company-operated margins in the U.S. and International Operated Markets segment reflected positive sales performance driven by strategic menu price increases, and the negative impact of inflationary pressures. Results in the International Operated Markets segment were also negatively impacted by the restaurant closures in Russia and Ukraine. Total restaurant margins included $1,501 million of depreciation and amortization expenses in 2022.
Net sales are distributed geographically as follows: the United States (41%), International operate markets (49%), and international development licensed (10).
As the home country of McDonald's, the United States has traditionally been one of its largest markets. McDonald's has a strong presence across the country, and the U.S. market accounts for a substantial portion of its global sales. In the western area we find that McDonald's has a significant presence in various European countries. Major markets in Europe include the United Kingdom, Germany, France, among others. Europe has been an important region for McDonald's in terms of sales and market share. However, other regions, such as Latin America, the Middle East, and Africa. These regions contribute to McDonald's overall sales, albeit to a lesser extent compared to the previously mentioned regions.
McDonald’s restaurants compete with international, national, regional, and local retailers of traditional, fast casual and other food service competitors. The Company measures its competitive position within the informal eating out ("IEO") segment, which is inclusive of the Company's primary competition of quick-service restaurants, but also includes 100% home delivery/takeaway providers, street stalls or kiosks, cafés, specialist coffee shops, self-service cafeterias, and juice/smoothie bars. The Company competes among quick-service restaurants primarily on the basis of price, convenience, service, experience, menu variety and product quality.
McDonald’s competes primarily in the IEO segment, which is highly competitive. They also face sustained, intense competition from traditional, fast casual and other competitors, which may include many non-traditional market participants such as convenience stores, grocery stores, coffee shops and online retailers. They expect their environment to continue to be highly competitive, and our results in any particular reporting period may be impacted by a contracting IEO segment or by new or continuing actions, product offerings or consolidation of their competitors and third-party partners, which may have a short- or long-term impact on their results. McDonald competes primarily on the basis of product choice, quality, affordability, service, and location.
Fast food industry competitorsMcDonald's faces competition from several companies in the fast-food industry. Here are some of its major competitors:
Burger King: Burger King is a global fast-food chain that offers a similar menu to McDonald's, including burgers, fries, and chicken items. It is known for its flame-grilled burgers and has a strong presence in the United States and other countries.
Wendy's: Wendy's is another prominent fast-food chain that competes with McDonald's. It differentiates itself by offering a "fresh, never frozen" slogan for its beef patties and a menu that includes salads, chicken sandwiches, and Frosty desserts.
Subway: Although Subway is primarily known for its sandwiches, it competes with McDonald's by offering quick-service options. Subway emphasizes its healthier menu choices, including a variety of fresh ingredients and customization options.
KFC: Kentucky Fried Chicken (KFC) is a popular fast-food chain specializing in fried chicken. While its focus is different from McDonald's, it competes in the fast-food industry and has a significant global presence.
Taco Bell: Taco Bell is a fast-food chain known for its Mexican-inspired menu, including tacos, burritos, and quesadillas. While its offerings differ from McDonald's, it competes for customers seeking quick-service dining options.
Chipotle Mexican Grill: Chipotle is a fast-casual chain known for its customizable burritos, bowls, and tacos. While it operates in a slightly different segment, it competes for customers seeking quick and customizable dining options.
In-N-Out Burger: In-N-Out Burger is a regional chain in the western United States. It is known for its fresh, made-to-order burgers and limited menu. Despite its smaller footprint, In-N-Out Burger has a loyal customer base and competes for customers looking for quality fast-food options.
McDonald’s strengthOne of the strengths of the franchising model is that the expertise from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, the Company is able to further develop and refine operating standards, marketing concepts and product and pricing strategies that will ultimately benefit McDonald’s restaurants.
Global presence: McDonald's is one of the world's largest fast-food chains, with a presence in over 100 countries. Its widespread network of restaurants gives it a significant advantage over competitors.
Brand recognition: McDonald's is a highly recognized and iconic brand globally. It has built a strong brand image over the years, which helps in attracting customers and driving sales.
Diversified menu: McDonald's offers a diverse menu with a wide range of options, catering to different tastes and preferences. This allows them to attract a broader customer base and adapt to changing consumer demands.
Operational efficiency: McDonald's has a well-established and efficient operating system, which enables them to maintain consistent quality, speed, and service across their restaurants. This efficiency helps them in delivering a consistent customer experience.
Strong franchising model: McDonald's operates on a franchising model, which allows them to expand rapidly without significant capital investment. Franchisees bear the cost and operational responsibilities, while McDonald's benefits from franchise fees and royalties
McDonalds OpportunityCommit to the Core menu by tapping into customer demand for the familiar and focusing on serving our iconic products such as our World Famous Fries, the Big Mac, our Chicken McNuggets and the McFlurry. Around the world, McDonald’s possesses 10 of these "billion-dollar brand equities." The Company will continue to improve on its classics by implementing a series of operational and formulation changes designed to deliver hotter, juicer, tastier burgers across the globe. While leaning into core icons like Chicken McNuggets, ongoing focus will include scaling emerging equities such as the McSpicy and McCrispy Chicken Sandwiches. The Company also continues to see a significant opportunity with coffee, demonstrated by markets leveraging the McCafé brand, customer experience, value and quality to drive long-term growth.
Expansion in emerging markets: McDonald's can capitalize on the growing middle-class populations and changing lifestyles in emerging markets, such as Africa region, China and India. These markets offer significant opportunities for growth and expansion.
Focus on healthier options: There is an increasing demand for healthier food choices. McDonald's can continue to enhance its menu with healthier alternatives, such as salads, grilled options, and organic ingredients, to attract health-conscious consumers.
Technology integration: McDonald's can leverage technology to improve customer experience and operational efficiency. This includes implementing self-order kiosks, mobile ordering and payment systems, and delivery services to cater to changing consumer preferences and convenience.
McDonald’s TreatsIntense competition: The fast-food industry is highly competitive, with numerous global and local players. McDonald's faces competition from both traditional fast-food chains and newer, innovative concepts, which could impact on its market share and profitability.
Changing consumer preferences: Consumer preferences and trends can change rapidly, and if McDonald's fails to adapt to these changes, it risks losing customers to competitors who offer more appealing options.
Regulatory pressures: McDonald's operates in multiple countries, each with its own regulations and policies related to labor, food safety, and advertising. Complying with these regulations can be challenging and costly, and changes in regulations can impact the company's operations and profitability.
Health concerns: McDonald's has faced criticism for the nutritional value of its food offerings. As consumer preferences shift towards healthier options, McDonald's has had to adapt its menu to include healthier choices, but it still faces challenges in changing its perception as a fast-food chain associated with unhealthy food.
Dependence on franchisees: While the franchising model is a strength, it also poses a risk as McDonald's depends heavily on its franchisees for the consistent operation of its restaurants. If franchisees face financial or operational difficulties, it could impact McDonald's brand image and customer experience.
Vulnerability to market fluctuations: As a global company, McDonald's is exposed to currency exchange rate fluctuations, changes in labor costs, and economic downturns in different markets. Such factors can affect its profitability and financial performance.
McDonald's Financial Health
McDonald's Corporation has generally been considered financially healthy. Here are some key points regarding McDonald's financial health: Revenue and profitability: McDonald's has consistently generated significant revenue and maintained a strong level of profitability. Its global presence and brand recognition have contributed to its ability to generate sales and drive profitability. McDonald's operates primarily on a franchising model, which has proven to be financially beneficial. Franchisees contribute to the company's revenue through franchise fees and ongoing royalties, while also bearing the costs of operating individual restaurants. This model allows McDonald's to expand without significant capital expenditure and helps in maintaining a steady cash flow. As today McDonald’s have a strong cash flow: McDonald's has historically demonstrated strong cash flow generation, which is essential for supporting
ongoing operations, investing in new initiatives, and returning value to shareholders through dividends and share repurchases. Adaptability, investment in technology and innovation, McDonald's has been investing in technology initiatives to enhance customer experience and operational efficiency. This includes digital ordering and payment systems, self-order kiosks, and delivery services. Such investments can position the company for future growth and competitiveness. However, it’s important to note that while McDonald's has generally maintained a strong financial position, it faces challenges and risks that can impact its financial health. These include factors like changing consumer preferences, intense competition, and economic conditions in different markets and their liabilities are greater than their assets.
Chris Kempczinski (54 Y)
3.7 years average management tenure
Mr. Christopher J. Kempczinski, also known as Chris, has been the President, Chief Executive Officer, and Director at McDonald's Corporation since November 1, 2019. He serves as an Independent Director at The Procter & Gamble Company since October 12, 2021. He served as President of USA at McDonald's Corporation since January 1, 2017, until 2019.
He served as President at McDonald's USA, LLC since January 01, 2017, until 2019. He served as Executive Vice President of Strategy, Business Development & Innovation at McDonald's Corporation since October 26, 2015, until December 2016. He first joined McDonald’s in 2015, overseeing global strategy, business development and innovation. He oversaw all aspects of strategy development, planning, innovation, and new concepts to drive growth for the company.
He served as the President of International and Executive Vice President of Growth Initiatives at Kraft Foods Group, Inc., since February 12, 2015, until September 2015. He served as the President of Kraft Canada Inc since July 2012 until December 2014 and served as Senior Vice President - U.S. Grocery from December 2008 to July 2012. Before joining McDonald, he held several leadership roles at The KraftHeinz Company (packaged food), including Executive Vice President at Kraft Foods Group, Inc since January 29, 2014 until February 2015.
He leads Kraft’s Canadian business unit overseeing all aspects of supply chain, sales, marketing, human resources and research, development, and quality. He has full P&L responsibility for the business including beloved brands such as Kraft Dinner, Kraft Peanut Butter, Cracker Barrel natural cheeses and Nabob coffee. During his time with Kraft Canada, he has led the business unit through transformative change with the separation from Mondelez International in October 2012 and later restructuring the organization’s resources to focus on simplification and innovation. He joined Kraft in 2008 as Senior Vice President overseeing brands in the meals and enhancers categories with iconic brands like Kraft Macaroni & Cheese and Kraft dressings.
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