December 16, 2010

Best Tweet of the Week

TV's Andy Levy says: Nothing says "I'm an unfit mother"
quite like suing McDonald's over Happy Meals



December 10, 2010

Subprime Time at McDonald's?

I recently had a conversation with a McDonald's Operator who also
worked in the McDonald's franchising department in the 1980s. We
were remembering the implementation of the "25% Down" policy for
Operators who open new or buy existing McDonald's stores.

This policy had multiple purposes but the most publicly discussed
was to give the buyer some flexibility if the business took a down -
turn for any reason (impact, road closure, local economy, etc.).

Is that same concern alive today? Store resale values have been
decimated by mandated rebuilding but when Operators are forced
into borrowing million$ to remodel or rebuild McDonald's real
estate ... is it all based on rosy projections or does anyone
worry about possible hard times?

We usually think of this kind of possibility as a threat to smaller
Operators but Operators with a large number of stores are at risk
because of the number of concurrent capital projects.


MCD Shareholders Hard to Please

McDonald's USA November same store sales came in at a
strong + 4.9% but investors were expecting more from
international markets.

One reason domestic sales were good is that the USA was
down 0.6% in November 2009 because of the advertising
wasted on espresso McCafe drinks.

Things will get interesting in March of 2011 when MCD USA
will be two years from the introduction of McCafe and will
be up against good comps for the rest of 2011.

Forbes reports: Not Much For Ronald To Smile About


December 2, 2010

SCC Buys MCD Real Estate with Fed $$$ ?

Since I'm one of the few people (outside of
Oak Brook IL) who knows anything about the
underground real estate and finance arm of
McDonald's Corporation I found the news that
broke this week both interesting and amusing.

In articles such as THIS ONE it was reported
that McDonald's was a recipient of government
funds in the Federal Reserve’s emergency
lending during the financial crisis.

Oak Brook was quick to release a statement

“McDonald’s Corporation was erroneously listed
by the Federal Reserve Bank as a recipient of
federal funds during the financial crisis of 2008.
McDonald's Corporation did not issue commercial
paper as a participant in the Commercial Paper
Funding Facility(CPFF). We believe the reason
for the error is that McDonald’s Corporation is
inaccurately listed as the parent/sponsor company
of Golden Funding Corporation, an independently-
owned company which did receive federal funding
during this period.”

Well...that's not entirely true. At least not to those
of us who refuse to consider the major suppliers to
McDonald's "independent companies". Golden Funding is
Golden Mac and is one arm of the vast System Capital
Corporation empire set up in the 1990s by McDonald's
and six of the major suppliers.

I find it entertaining to see how nervous Oak Brook
gets when anyone asks about what System Capital owns
or what it does.

But to call it "independent"?
I don't think so.