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The final days of McDonald's?

Discussion in 'Sports and News' started by da man, Oct 16, 2015.

  1. da man

    da man Well-Known Member

    When I was a kid, I hated McDonald's because I only wanted ketchup on my Quarter Pounder, so they had to make mine special and I had to wait while everyone else was already eating their burgers, which, as you noted, were already made and pulled from the rack.
     
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    McD's is at least talking about spinning off its real estate holdings into a REIT (the way Olive Garden did with its properties) again. This has come up before. With its sales slumping lately, some of its shareholders have been calling for the spin off, which would create immediate shareholder value -- REITS get valued at higher multiples than restaurant chains. There was actually a story in the Wall Street Journal yesterday about this, in which one of the board members gave an interview saying they have been discussing it and are really close to a decision.

    The odds that McD's does a spinoff may be low still, because as you were pointing out, the revenue it makes from charging its franchisees rent is huge. But if its core business continues to not grow (and keep shrinking) they won't be able to hold it off. There will be an activist investor -- a Carl Icahn type -- who will step in and force them to do it.
     
  3. doctorquant

    doctorquant Well-Known Member

    My childhood best friend liked his stuff plain, too. Whenever we went, it was a major pain, because you'd have to wait for the next batch that was scheduled, then out of that batch they'd make one to order. The new approach changed all that.
     
  4. doctorquant

    doctorquant Well-Known Member

    That would be quite fun to watch, because: 1) I suspect there would be other investors to whom the separation of real estate from the core business would seem to be a very dicey proposition, and therefore; 2) they'd try to find their own activist investor to make that case. Could be quite the amusing pissing match.
     
  5. Ace

    Ace Well-Known Member

    Here is what I like about McDonald's:

    • Their Cokes are good and they have nice straws.
    • Their food is easy to eat in a car.
    • They used to have reliably clean bathrooms when on road trips.

    Other than that, it's a good sign that Americans are staying away. And good that fast-casual places like Chipotle are much more popular than your old-fashioned burger and fries and mystery meat taco fast food places.

    I also think if Americans are turning away from soft drinks to water, that's a killer for places like this. The soft drinks and tea are almost pure profit.
     
    exmediahack and I Should Coco like this.
  6. dixiehack

    dixiehack Well-Known Member

    I love Egg McMuffins and Sausage McGriddles - neither of which is available here during "all-day" breakfast.

    At least in this metro area, McDonald's is struggling because many of the stores are dirty and virtually all of them are mismanaged and filled with surly, incompetent employees, much more so than the average fast food emporium.
     
  7. Big Circus

    Big Circus Well-Known Member

    My college SE (not the one who posts here) used to do that to make sure they made his food fresh. Which led to a road trip where he ordered a Whopper, no onions, with onion rings.
     
  8. SnarkShark

    SnarkShark Well-Known Member

    I can't even walk by a McDonald's without that fucking smell making me want to vomit. I don't know what exactly the smell is, but it surrounds every single McDonald's and it sure as hell doesn't smell like food.
     
  9. The Big Ragu

    The Big Ragu Moderator Staff Member

    I can't speak to a REIT that doesn't exist yet. But in theory, I can't imagine the shareholder who would oppose that. Unless they are averse to making money on their investments. The value of the REIT shares would almost definitely far outweigh any hit to McDonald's shares from ceding the rental revenue. Plus there are amazing tax benefits McD's doesn't get. And there would be a healthy dividend. McDonald's is sitting on a goldmine of property right at the height of a real estate bubble that probably has limited time left in it. And the value isn't being reflected in the share price. If they announced a spin off tomorrow, I guarantee you the share price of McD's would soar -- this is why this is a recurring issue for them. If I was an investor, I'd be pulling for it. In fact, that unrealized value is about the only reason I would consider investing in McDonald's.
     
  10. Mr. Sunshine

    Mr. Sunshine Well-Known Member

    You deserved to wait.
     
  11. Mr. Sunshine

    Mr. Sunshine Well-Known Member

    As long as I can get Chick- Fil-A, who cares? Doesn't impact me.
     
    JackReacher likes this.
  12. Mystery Meat II

    Mystery Meat II Well-Known Member

    Oh you can just EAT ME.

    [​IMG]

    It's odd, because on the one hand I can see the wisdom in making sure biscuits are offered all day in the biscuit-heavy areas. On the other hand, the biscuit-heavy areas have far superior biscuit options. Bojangles, Biscuitville and Tudor's offer better biscuits than McD's, but none offer Egg McMuffins, so why not deal in the area where you have brand credibility and lesser competition?
     
    Ace likes this.
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