August 25, 2016

McDonald’s: Come for the Cash Flow, Stay for the Upside?



  Stocks to Watch - Barrons.com

5 comments:

Anonymous said...

I keep going back to Easterbrooks statements to Wall Street that he will cut Five hundred million dollars out of the company P&L by 2018 in the USA. If he does that I think the stock will spike upward to near $200.00. It will also show how bad this company has been managed for many years.

I don't know where he is on this path but it sounds positive.

Anonymous said...

Easterbrook would have an easier time reaching his goals if he would get rid of the regional management who are anti-operator. The QSC-VP of the PAC-Sierra Region was recently head grousing about the (quote) "G#d D%mn operators are already making enough money"
Its hard to be a partner with someone with an attitude like that!

Anonymous said...

Absolutely true. I recently had my operator review, such as they are these days. The field Service manager in the presence of the Director of Field service said, "I think you make too much money". I didn't know how to respond so I didn't. The regions are full of small minded people who think they are experienced business people because they once qualified for a mortgage. My opinion is that many of MCD serious problems start in the regions. The MCD bureaucracy has ballooned to the point where it is dragging the entire system down. Easterbrook is on the right path offering buy outs to many and they are lucky he is going that route. If he is going to cut $500,000,000.00 in costs from the USA P&L half of it should come from the payroll. Selling stores, cutting payroll, closing satilite sites, selling excess real estate are likely in his plan. It is a travesty that all of these costs were allowed to grow as they did without any oversite. As you noted the QSC-VP's are some of the worse in the regions. We had one leave here who was hated. She was envious, crossed up with the operators and is now helping run company stores. As far as making money we are having a good run because of low commodity costs and low interest rates but that won't last much longer.

Richard Adams said...

"Its hard to be a partner with someone with an attitude like that!"

The "partnership" is betweeen McDonald's execs and MCD shareholders.

Anonymous said...

As a factual matter that is true. MCD is a public company. However, for that partnership to be successful MCD has got to throw off dividends and increase the value of the stock. MCD USA is no longer a growth company. Most sales increases must come from marketing, new products, customer satisfaction and dividends must come from operating effiencies on the company side. This, in my opinion and I have no facts that I'm writing from, is what Easterbrook has got to do. He has got to cut out the fat and let those savings fall to the bottom line and reap investor cash. Once that begins the stock price should rise. You are correct, if one wants to be a true partner of MCD become an investor and buy the stock.

Once again, MCD and the operators are not partners. The operators simply purchase a product and services from MCD. I, for one, don't want to be a partner with MCD except as a shareholder.