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Must-know: McDonalds’ quarterly earnings summary
McDonalds’ management plans to tackle growth issues with various strategies, including providing relevant food choices to the customers, easing up ordering at restaurants, and the ability to customize and personalize the menu.
Franchise margins declined by 0.6% to 82.2% in 2Q14 due to an increase in rents and depreciation expense along with franchising—company operated margins also declined by 0.6% to 17.1% over the same period.
The management plans to revive the U.S. markets by improving customer experience through menu personalization, speed and accuracy of service, re-imaging restaurants, and digitally engaging customers.
McDonald’s reported flat global comparable sales and negative comparable guest count for 2Q14, which is concerning from a long-term income growth perspective.
The company reported $7.18 billion in revenues, against the consensus estimate of $7.28 billion—revenues for the same quarter a year ago in 2013 were $7.08 billion.
Higher inventory levels are a positive for second quarter gross domestic product (or GDP) growth.
Same store sales increased by 0.1% over last week, according to the ICSC-Goldman Same Store Sales Index.
Wall Street analysts estimate an earnings per share (or EPS) of $1.44 with forecast as high as $1.48 to as low as $1.41.
Taking secured loans and the rents earned from these properties can be used towards debt servicing.
The company revenue growth has seen a volatility from anywhere between the low of -3.3% in 2009 to a high of 12.18% in 2011.
At the end of 2013, McDonalds’ year-over-year (or YoY) sales increased by 1.95% compared to its competitors that experienced a decline, collectively.
McCafe was an initiative that focused on capturing the hot and cold beverage market in the restaurant industry.
Serving food to 70 million customers daily requires consistency, which comes from the ingredients as well as the food preparation process.
It competes directly with similar format chains such as Yum! Brands (YUM), Wendy’s (or WEN), Domino’s Pizza (or DPZ) Burger King (or BKW), and Jack in the Box (JACK).
McDonald’s has pioneered restaurant chain expansion.
Due to increasing pressure, McDonald’s has been focusing on introducing healthier versions to its menu such as salads and wraps.
The low cost menu has been one of the catalysts that attracts customers to McDonald’s.
At the end of 2013, McDonald’s had 440,000 employees.
At the end of 2013, McDonalds had 40% of its debt denominated in foreign currency.
McDonalds opened its first international restaurants in Canada and Puerto Rico in 1967.