McDonald’s is, without question, one of the most well-known fast food franchises worldwide. This eatery has its roots in California’s post-World War II era.
Its long-term success is beyond even the wildest dreams of its original creators. We believe its original creators planned for such to happen.
Today, this business is one of the wealthiest in history, thanks to its global franchise network. There is no doubt that it compares to other substantial international corporations.
Some estimates place the number of daily users at about 70 million. Considering that it has over a hundred different countries represented by its stores, this won’t surprise you.
The corporation also employs about half a million employees from other countries. As you might expect, it possesses enormous resources and influence.
There’s probably a ton of information about this eatery online in the form of anecdotes and anecdotal evidence. But we’ve chosen to let you in on some secrets about McDonald’s that you probably didn’t know.
This article discusses its background, development, impact, and value as of 2023. We are confident that you will find the upcoming details to your liking.
History
Richard and Maurice McDonald started a business in San Bernardino, California, in 1940, but it didn’t look anything like the McDonald’s of today. At first, it served as a simple hamburger stand.
In 1955, industrialist Ray Kroc transformed the company into a franchise and began updating its operations. McDonald’s trademark application in the United States dates back to 2004.
According to Kroc’s autobiography, he and the McDonald brothers argued over who would run the company.
Growth
McDonald’s serves 68 million customers daily at 37,855 locations in 120 countries. Kroc is generally credited with the company’s forced modernisation, contributing to its worldwide popularity.
He bought out the McDonald brothers’ stake in the company to expand internationally. Donatos Pizza, Aroma Cafe, Chipotle Mexican Grill, and many others were all owned by McDonald’s.
However, McDonald’s began selling its stake in these franchises in the 1990s to refocus on its namesake brand.
Sales Decline
Although McDonald’s is the undisputed leader in the worldwide food service retail industry, the corporation had a monthly sales decline for the first time in nine years in 2012. In 2014, quarterly sales went down for the first time in 17 years, continuing a downward trend that began in 2013.
The following year, 184 McDonald’s locations around the USA shut down. The United States has yet to see a net decline in the number of places since 1970.
Products
TheFoodXP reports that McDonald’s has sold burgers, chicken sandwiches, french fries, breakfast foods, sweets, and soft beverages.
The company has responded to accusations that it sells unhealthy food by expanding its menu to include fish, salads, and smoothies.
Customers can choose between eating in and ordering to go. Customers can either eat in the restaurant, as in the first option or take their meal to go, as in the second option.
Changes got done under CEO Steve Easterbrook’s watch since 2015, including the elimination of artificial preservatives in Chicken Nuggets. Easterbrook hoped to include more healthful alternatives in light of all this.
There are numerous distinctions between nations. Soup is available at some Asian McDonald’s locations, beer is available in Germany, and a meat pie is available in New Zealand.
Measuring McDonald’s Net Worth
Market value is widely used to evaluate businesses since it is simple to compute. You only need the current price and the number of shares in the company’s float.
Consider a corporation with a price of $20 per share and an outstanding share count of five million. Five million outstanding shares multiplied by $20 per share equals a market valuation of $100 million for that company.
With around 739.55 million shares outstanding, the value of McDonald’s at the market close on August 3 was over $191.58 billion ($262.09 x 739.55 million shares).
Market capitalisation helps draw comparisons between companies with widely varying share prices. On August 4, the share price of White Mountains Insurance Group was, for example, $1,253.68.
Compared to McDonald’s stock price on the same day, this is a massive increase of almost five times. But one company is significantly larger than the other in market capitalisation.
With only 2.95 million outstanding shares, White Mountains Insurance Group has a market valuation of $3.69 billion, significantly less than McDonald’s. It demonstrates why market capitalisation (market cap) is preferable to share price when assessing a company’s size.
However, investors can assess a company’s worth in other ways besides its market capitalisation. Market capitalisation constantly fluctuates due to its correlation with the share price.
Also, growth rate, earnings per share, and book value have nothing to do with a company’s market capitalisation. Many investors favour the price-to-earnings ratio to measure a company’s value.
McDonald’s Market Cap
The market capitalisation of a corporation is dynamic since it fluctuates with the price of its shares. The stock cost of McDonald’s has gone up and down during the past year.
The 52-week share price range is $217.68-$271.15.
The market value of McDonald’s has followed suit throughout the same time frame. It has reached a new high of $191.58 billion.
McDonald’s Net Worth
As of 2021, McDonald’s has a negative net value of $4.6 billion. Even though it looks strange on paper, one of the most recognisable brands in the world has a negative net worth.
McDonald’s is undoubtedly a money-making machine, with over $1.64 billion in net income in the most recent quarter alone.
There is a vast range of approaches to estimating a company’s worth, each with its strengths and weaknesses.
We take a different approach to computing net worth by factoring in company-specific information. The Evaluation of a company’s net worth is a valuation determined purely by complex, observable data, such as asset and revenue values.
This valuation is more restrained than most because it only considers the company’s assets and liabilities and annual profits and revenues over the past three years.
According to this measure McDonald’s is worth $36.53 billion.
Net worth reflects a company’s actual financial value more accurately than market capitalisation, which is why “shareholders’ equity” is another term accountants use to refer to net worth.
However, accounting methods could impact the reported net worth of a corporation like McDonald’s. Therefore this is only sometimes a good indicator of a company’s underlying value.
McDonald’s Top-Gaining Product Categories
McDonald’s has a relatively straightforward balance sheet for such a massive, global, multibillion-dollar corporation. The company derives its income primarily from two sources: sales at company-owned restaurants and sales at franchised eateries.
No need to explain how much money the corporation makes from its restaurants. McDonald’s gets paid when you buy a Big Mac from one of its franchises or company-owned restaurants. About 93% of McDonald’s restaurants worldwide are franchises, yet the parent company makes money differently.
For the quarter ended June 30th, McDonald’s reported the following revenue by operational segment:
- Company-owned dining establishments raked in $2.11 billion in sales.
- $3.52 billion in rentals and royalties from franchised eateries.
The most recent quarter has accounted for a whopping 5.6 billion dollars in revenue.
Top McDonald’s Investors as of Right Now
Like the top 10 shareholders of many other corporations, the entire McDonald’s stockholders are all mutual fund or asset management firms. Institutional investors hold a total of 69.60% of McDonald’s stock.
The top ten stockholders are as follows:
- Shares 9.06% owned by Vanguard Group
- Blackrock Inc owns 6.82% of shares.
- A 4.92% stake in State Street Corporation
- Management Office of Wellington. LLP, 2.81 percent of the stock
- Stock held by JPMorgan Chase & Co. is 2.48 percent.
- Geode Capital Management LLC owns 1.76% of the shares.
- 1.60 percent of shares owned by Bank of America Corp.
- 1.28 percent of shares held by Northern Trust Investments, Inc.
- Shares owned by Morgan Stanley (1.26%)
- Bank of America Corp., 1.12% of shares
Given the prevalence of McDonald’s stock in mutual funds, it’s likely that you already own some of the company if you invest in mutual funds or exchange-traded funds. The following are the percentages of McDonald’s shares held by some of the most well-known invested funds and exchange-traded funds:
- The Vanguard Total Stock Market Index Fund, with a 2.90 per cent holding
- Stock in the Vanguard 500 Index Fund, 2.21 per cent
- 1.10 percent of shares owned by Vanguard/Wellington Fund, Inc.
- 1.08 percent of shares in SPDR S&P 500 ETF
- 1.07 percent of holdings in the Fidelity 500 Index Fund
- 0.87% of holdings in the iShares Core S&P 500 ETF
- 0.81% of Vanguard’s stock is in their Focused Dividend Growth strategy.
- 80 basis points of Vanguard Growth Index Fund
- SPY, 0.77 percent of the Dow Jones Industrial Average ETF
- Index Fund, Vanguard Institutional, 0.76 percent of shares
Finalist Case Study for the 2020 McDonald’s Corporation Award
McDonald’s public commitment to our investors at the March 2017 Velocity Growth Investor Event that it would implement Mobile Order and Pay to over 20,000 stores by the end of the year garnered attention from throughout the industry.
The media narrative shifted when McDonald’s Velocity Growth Plan, which prioritises the needs of our customers, made headlines. McDonald’s created the Global Technology Project Management Office (GTPMO) to help implement this strategic plan.
PMO methods, standards and a governance framework were quickly established by the team, which reports to Daniel Henry, Executive Vice President and Worldwide Technology Chief Information Officer, to prioritise and operationally manage this large worldwide project.
The Global Technology Portfolio Management Office’s principal objective is to promote McDonald’s growth and operational excellence through technology.
McDonald’s most extensive ever undertaking was completed without going over budget and ahead of schedule.
Our near-term success allowed us to shift our attention to the long-term plan of leading an agile transformation and broadening the GTPMO’s remit to include overseeing the worldwide rollout of the critical strategic business priorities identified in our Velocity Growth Plan.
- McDonald’s now offers a delivery service through Uber Eats and other third-party providers (such as GrubHub and DoorDash).
- We’re using kiosks to provide eateries worldwide with a taste of the future.
- Our digital platform is the cornerstone of customer relationship management and loyalty features.
Tools for restaurants to use in implementing novel menu concepts
By the end of 2019, the Global Technology PMO had successfully rolled out Mobile Order & Pay to over 24,000 locations worldwide, Self-Order Kiosks in over 20,000 restaurants, and expanded Delivery to over 60% of the global McDonald’s system.
Our results for the fourth quarter of 2019 show that these initiatives directly and positively affect McDonald’s growth plan.
McDonald’s President and CEO Chris Kempczinski remarked, “2019 was a year of significant milestones for McDonald’s,” including the company’s most robust worldwide comparable sales growth over a decade and passing $100 billion in Systemwide sales.
The report said the Growth Strategy has helped them increase the client base and sustain annual growth in worldwide comparative guest numbers for the past three years.
In the words of our CEO, “Digital is transforming global retail, and it will transform McDonald’s.”
Regarding the Awards
Creating the Business Transformation & Operational Excellence Awards aims to publicise the best examples of Operational Excellence worldwide.
The Gala event to announce winners of the 2020 Business Transformation & Operational Excellence World Awards (BTOES) will occur on March 25 at 6.30 pm in the Venetian Ballroom of the Loews Portofino Bay Hotel at Universal Orlando Resort.
To be eligible for the Business Transformation & Operational Excellence Awards, a company or government agency must have successfully executed an Operational Excellence program that has produced exceptional business results.
On March 25, 2020, the Loews Portofino Bay Hotel at Universal Orlando will host the Business Transformation & Operational Excellence World Summit, BTOES 2020, where the awards ceremony will occur in the hotel’s stunning Venetian Ballroom.
Where Does McDonald’s See Itself Going Forward?
McDonald’s well-known name is an invaluable resource, and going up against the market. But how has the stock been performing recently, and have earnings been growing at a rate that can sustain more price increases?
By the end of 2022 initial half, the McDonald’s car still had a buzzing engine.
According to CNBC, McDonald’s reported earnings per share of $2.55 for 2022’s second quarter, which concluded on June 30. It was 8 cents higher than what analysts had predicted.
Sales were below expectations at $5.72 billion, down 3% from the previous quarter but contributing 8% growth over the last six months.
Global comparable sales increased by 9.7%, with expansion felt in every market. The pricing increases throughout the regular menu, and the digital options drove the 3.7% growth in the American market.
The release acknowledges difficulties such as declining comparable sales in China due to continued epidemic restrictions, the closing of restaurants in Ukraine and Russia, and the impact of inflation on labour and commodity expenses.
McDonald’s President and CEO Chris Kempczinski commented, “The McDonald’s System continues to demonstrate strength and resilience.” Even still, difficulties persist across the board in the competitive climate.
Should You Buy McDonald’s Stock?
Putting money into a single stock is a high-stakes gamble. Individual stores may yield substantial profits if the market goes in the right direction, but they also risk huge losses if it goes wrong.
Many financial experts advise clients to only have one stock account for up to 5% of their portfolio.
You should consider your financial status and McDonald’s financials before making an investment decision. Before making any significant investments, it’s essential to determine what you hope to achieve and how much you’re willing to risk.
You should consult a trustworthy financial professional to weigh the benefits and risks of investing in McDonald’s stock.
Wall Street thinks McDonald’s is still a bargain. Fifteen of Yahoo Finance’s 33 analysts recommend buying the company, and eight call it a “strong buy.” Their average price target is $279.87, approximately 8% higher than the stock’s $259.02 price as of midday on August 4.