In Focus

A Chicky Piece on Mickey D's

"Big Mac, Filet-O-Fish, Quarter Pounder, French Fries.
Icy Coke, Thick Shake, Sundaes, and Apple Pie."

In grade school my friends and I would repeat that catchy little tune over and over again. Back then, eating at McDonald's (NYSE:MCD) was only for very special occasions; friends' birthday parties or if mom really didn't have the time to cook. Nowadays it's another story. At a time when there is no time, fast foods have become a staple of many American lives, children or otherwise. I am as guilty as the rest of you. Whenever we're in a hurry, Happy Meals make happy kids.

When salesman Raymond Kroc was 52 years old, he thought he was the only dealer for miles selling a five-spindle milkshake maker. It wasn't long, however, before the devastating news of a hamburger stand in California running eight mixers at a time to make their milkshakes reached him. He closed up shop and headed out to investigate. He watched in awe at the incredible rate at which Dick and Mac McDonald served their meals. Immediately he saw dollar signs. Could he convince them that destiny brought them all together, and that they should open up several of these hot spots? 'Cause if he could, he'd be able to sell them an awful lot of mixers! Not only did this incredible salesman convince them of that, he also got them to believe that he was just the man to get them started. So in 1955, in Des Plaines, Illinois, the very first McDonald's restaurant was opened.

Shortly after, in 1963, the then unknown Willard Scott jumped into the role of Ronald McDonald. Would you believe that today he is the second most recognized "person" next to Santa Claus? (I mean Ronald, not Willard, although I'm certain dear Willard is up there somewhere, too!) That high visibility combined with the ability to produce fast, delicious food put McDonald's on the map. In 1965 they went public, and 100 shares of their stock at a cost of $2250 then would have been worth 74,360 shares of stock today. The value? A Super-Sized $2.8 million.

McDonald's Corporation has grown to be much more than a company that simply develops and operates restaurants worldwide. Although they boast of their 28,000 restaurants, 12,600 in the United States and in 120 countries, they also have a vested interest in other chains: Chipotle Mexican Grill, Pret A Manger, Donato's Pizza, and approximately 750 Boston Markets. Their reputation has earned them a number one ranking in Fortune Magazine's Social Responsibility and Most Admired Companies list. The Ronald McDonald House, which started in 1974 as a joint venture between McDonald's and Phildelphia Eagle Fred Hill, was established for the families of critically ill children. Today it continues to provide a warm, home-like atmosphere for loved ones needing to be near the hospital throughout very difficult circumstances. This is a well-rounded company; very credible and highly respected.

Financially, MCD's Fiscal Year ending 12/31/00, reported that revenues were up 7% to $14.24 billion, and net income was up 2% to 1.98 billion. Researching fourth quarter revenues back to 1997, the company's growth has been steadily on the rise:

1997    $11,408,800

1998    $12,421,400

1999    $13,259,300

2000    $14,243,000

This makes a Chick as happy as a toddler with a Chicken McNugget. And like a Number Two Value Meal with a chocolate shake, McDonald's has given us a glimpse into the first quarter of 2001, and it's looking pretty damn tasty. Global system-wide sales for the first two months were 6.2 billion, a 4% increase for the number one fast-food chain.

Now I ask you to ask yourselves a very Chicky question. First, are you hungry yet? And second, what would you, the average Chick consumer, expect in the future from a company such as this? Do you think they'll disappear forever like my favorite Marathon bar did many years ago? How do we know the same horrible demise isn't awaiting those famous golden arches?

I can't predict the future, but what I can tell you is that as long as we're looking for the fastest route, the fastest car, the fastest Internet service, the fastest way to make a buck, or the fastest way to save a buck, there will be a need for fast food. Or as long as we have ballet, soccer games, hockey games, charity meetings, laundry to do, dry-cleaning to pick up, houses to clean or articles to write, there will be this need. It's parent-friendly, child-friendly, first-date friendly, football player friendly, birthday party friendly, and pocketbook friendly. On the other hand, if you can see a big change in how we run this rat race called life, then perhaps you can visualize a slow-down or an end to this particular necessity. Honestly, it doesn't seem possible, does it? (Hm. Maybe we all need a vacation!)

Finally, Chick Karin recently mentioned in a weekly wrap that McDonald's had introduced their new Mighty Kids Meals, for those youngsters who find they're still a little grumbly in their tumbly with the typical Happy Meal. They're still coming up with new deals to entice us. What will they think of next?

With their current stock price at $26.09, closer to their 52-week low of $24.75 than their 52-week high of $39.92, McDonald's extra values seem to be extending beyond their meal deals. And since you frequent their establishments as much as you do, you may as well find out if it's worth putting your money where your mouth is!