Bottom Line Up Front
McDonald’s has achieved the following results in the last 10 years:
- Revenue (Mil): $19,065 to $28,106 – [47% Increase]
- Profit Margins: 11.95% to 19.87% – [66% Increase]
- Cash Flow Per Share: $1.83 to $4.27 – [133% Increase]
- Book Value: $11.30 to $16.16 – [43% Increase]
- Outstanding Shares (Mil): 1274 to 1006 – [21% Decrease]
- Dividend: $.55 to $3.12 – [467% Increase]
- Shareholder Returns: $40.91/share returned to shareholders through dividends and share buybacks
Business Operations – This company franchises and operates McDonald’s restaurants in the global restaurant industry. These restaurants serve a broad menu at various price points providing value in 119 countries around the world. McDonald’s operations are designed to assure consistency and high quality at every restaurant. When granting franchises or licenses, the Company is selective and generally is not in the practice of franchising to passive investors.
Conventional franchisees contribute to the Company’s revenue stream through the payment of rent and royalties based upon a percent of sales, with specified minimum rent payments, along with initial fees received upon the opening of a new restaurant or the granting of a new franchise term. The conventional franchise arrangement typically lasts 20 years, and franchising practices are generally consistent throughout the world. Over 70% of franchised restaurants operate under conventional franchise arrangements.
Doubt – A lot of people have questioned McDonald’s business model in the new world of “organic” foods, conscious healthy meal planning and fad diets. But at the end of the day money and numbers have the last laugh. McDonald’s serves approximately 69 million customers a day. Additionally they continue to increase their market share not only in the U.S. but overseas as well. You have to remember that this company has 34,480 restaurants doing business in over 119 countries and a significant amount of their revenues and income is generated abroad. Sales in both the U.S. and Europe increased for the 9th year in a row.
Outlook – Moving forward McDonald’s is working tediously to promote and expand their brand in the Asia Pacific, Middle Eastern, and Africa region of the world. They plan to open approximately 850 new restaurants while advancing their efforts to become the favorite place to eat and drink.
Industry King – While McDonald’s is definitely not the growth story it once was it is undeniably clear that this fast food restaurant chain is behemoth that should be a prerequisite for any dividend investing portfolio. Take a look at their profit margins! Generally a company’s profit margins decrease over time because entrepreneurs recognize the lucrative industry and try to take away market share. In this case the brand of McDonald’s is so strong coupled with spectacular management over their franchises that their profit margins have increased.
By The Numbers – Over the last 10 years they have increased their dividend over 400% – imagine getting a 400% raise at your job 10 years from now. I’m sure you’d be sitting pretty, right? Additionally they not only increased income to their shareholders but increased shareholder value by repurchasing over 20% of their shares. Think of this as starting out with a pie that is cut evenly into 5 pieces but now that same pie is cut evenly into 4 pieces. This means there is more pie per slice and I don’t know about you but the more pie in my slice the better!
Do you currently own MCD? What do you expect to see from McDonald’s over the next 10 years?
This infographic is not a recommendation to purchase this stock but should be used as a reference for your own due diligence. I am not a registered financial advisor, anything you find on my site is for informational purposes only. Investors trade at their own risk.