January 15, 2015

Ackman Comments on McDonald's

We've discussed activist investors before. This interview with Bill Ackman is
a rapid-fire education on how hedge fund managers think. If you like high
finance it's 17 minutes well spent.

Ackman comments on McDonald's - Business Insider
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8 comments:

Anonymous said...

Ackman must be reading this site. Clearly, MCD is living off of it real estate appreciation and not operations or sales. Wait until he see's the new marketing plan. BK being better managed than MCD. What a fall. The board should be replaced in addition to most of top management!

Richard Adams said...

I think Ackman is talking about BK being better managed in a financial sense. In other words, the investment groups who own BK have stripped the company to the bone and there is little franchise infrastructure left. In Ackman's world that's good management.

As for the real estate - if by "appreciation" you mean continuing to charge franchisees higher and higher rents that's certainly happening.

The real estate investment trust operated by a group of McDonald's vendors is the entity that benefits from increases in real estate values. But that never makes it to McDonald's shareholders.

Anonymous said...

This has been a fact since Sonnenborn. Some lesser brand Franchisee's are so much more wealthier than McDonald's Franchisee's as they themselves own the Real Estate and use the their brands to pay their mortgages. I think in the future it will be harder to convince astute Franchisees to come on board. Fix the FOOD, you Fix most of the PROBLEM. Then the model can be figured out. But Operators are fatigued financially and emotionally on all the roll outs.

Richard Adams said...

Don't count on any substantial changes to the MCD board of directors. The board is heavily peppered with suppliers, employees, and inter-connected individuals.

Richard Adams said...

While Sonneborn was the original McDonald's real estate genius he left McDonald's in 1967. He would have never envisioned the McDonald's real estate program launched in the early 1990s.

Anonymous said...

Face it. Unless we change upper management, the brand is dying

Anonymous said...

How does someone become a member of the MCD board of directors? Who appoints them and what are the terms? Has there ever been a franchisee on the MCD board?

Richard Adams said...

Nominated by the board and voted on by shareholders. There has never been a McDonald's franchisee on the McDonald's board. I wouldn't expect that to ever happen.