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CramersPosse Sam Young Jason Linder Alex Vong

CramersPosse Sam Young Jason Linder Alex Vong. Company Profile. First McDonald’s 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 McDonald’s Corporation

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CramersPosse Sam Young Jason Linder Alex Vong

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  1. CramersPosseSam YoungJason LinderAlex Vong

  2. Company Profile • First McDonald’s 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 McDonald’s Corporation • Today:Headquarters: Oak Brook, IL31,000+ locations worldwide>1.5 million employees>$20B annual revenue

  3. Key Statistics (Stock)

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

  6. Business Financials

  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

  9. Stock Performance

  10. Stock Performance (cont’d)

  11. Technical Analysis Buy signals

  12. Technical Analysis (cont’d) Sell signals Buy 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 McD’s 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: HoldMcDonald’s 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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