Fast Food Breakfasts Feeding McDonald’s Bottom Line
As McDonald’s Corporation (MCD)continues to deliver impressive results in a difficult economy we are pleased to offer a complimentary download of relevant excerpts from Plunkett Research’s Food Industry Almanac. The Almanac also features a spotlight on Wal-Mart (WMT) and covers topics such as organic and “functional” foods, ethanol and the growing use of RFID technology.
The Almanac includes a spotlight on McDonald’s, highlighting the company’s impressive resurgence after posting losses for 13 consecutive months in 2002-2003.
Selected Excerpts:
Growth continues, with $2.1 billion invested in 2009 to further remodel existing locations and build approximately 1,000 new restaurants around the world. 240 of those were in Europe, 165 in the U.S. and 600 in Asia. This is while most restaurant chains are fighting to keep the doors of their existing locations open. McDonald’s has opened large numbers of locations in China’s major cities with good success, but it has not caught up with China’s fast food leader, KFC.
Perhaps the most lucrative focus adopted by McDonald’s is the extension of operating hours, in many cases staying open around-the-clock. Breakfast has become the biggest moneymaker, comprising 30% of a typical day’s sales.
The market for fast food breakfast in the U.S. reached $25 billion in 2008 annual sales, of which McDonald’s claims one-fourth. The company hopes to expand on its breakfast bonanza by extending hours in which breakfast items are available from seven hours in most all-night locations to 24/7.
The 39-page report has been made available free of charge to Research Recap users for 30 days by special arrangement with Plunkett Research, an Alacra content partner. After 30 days, the report will revert to its regular Alacra Store price of $149.99)
For additional free research reports from the Alacra Store click here
Related Research on McDonald’s from Alacra:
Zacks ( Mar 9 ) “We think McDonald’s provides relative safety for the investor, with moderate growth prospects, being exposed to faster-growing international markets. However, the economic headwind, which has affected consumers’ disposable income, is impeding growth”
David Palmer, UBS ( Mar 8 ) “We view McDonald’s results as one of the most impressive we have seen in a while.” Buy, target $72.
Joseph T. Buckley, BofA Merrill Lynch ( Mar 8 ) “We continue to rate MCD shares Buy as a Sales Leader.” Target $71.
Paul Westra, Cowen & Co (Mar 8 ) We continue to believe shares of MCD will outperform the market by over +15% over the next 12 months.”
Jeffrey A. Bernstein, Barclays Capital ( Mar 8 ) “Our price target for McDonald’s remains $71, or ~16x our calendar 2010 EPS estimate of $4.40.” Overweight.
John Glass, Morgan Stanley ( Mar 8 ) “While MCD faces more difficult compares in the months ahead, we remain confident the company will continue to gain share in the US as the McCafé program expands with frappes hitting mid-to-late Spring & smoothies due out this summer. ” Base Case $67.
Gregory R Badishkanian, Citigroup ( Mar 8 ) “We rate McDonald’s Hold/Low Risk (2L), with a target price of $67.”
Matthew DiFrisco, Oppenheimer ( Mar 8 ) “…we maintain our Perform rating and would become more constructive on the shares below $60.”
John Ivankoe, JP Morgan ( Mar 8 ) “We maintain our Dec 2010 price target of $68 with our target reflecting a 15.5x multiple on our C10 estimates.” Overweight.
Fitch Ratings ( Feb 25 US Restaurant/Foodservice Outlook ) “McDonald’s Corporation Ratings (A/Stable) reflect the company’s geographically diverse revenue base, substantial cash flow generation, and stable royalty stream. Industry leading margins and SSS performance further strengthen the company’s credit profile. Fitch believes operating performance will continue to guide the company’s financial strategy. McDonald’s credit statistics are projected to remain relatively stable in 2010.”
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