Time is the latest media outlet to climb aboard the McDonald‘s (MCD) bandwagon. Last week, it was the New York Times. The tough economic times are good for a low-cost restaurant like McDonald’s but that’s not the whole story:
“The economy is not the only reason people are drawn to McDonald’s. The company’s management also deserves credit for its success. Back in 2003, America’s obesity epidemic was a hot topic, and McDonald’s suffered from the backlash. For the first time in its 47-year history, the company saw a quarterly loss. Its stock was down to $12 a share. You couldn’t just blame bad p.r. for the company’s woes. Stale food and tired stores also kept people away. “McDonald’s was actively dissuading customers from coming back,” says John Glass, a Morgan Stanley analyst.
“Since that time, McDonald’s and its franchises have remodeled 11,000 stores (there are now 31,000 locations around the globe). At a spruced-up restaurant in the Bronx one weekday evening, Brian Waters, a mailman, sat with his 9-year-old son in a booth. The bright dining area featured abstract paintings of New York City’s bridges and the Statue of Liberty. “It used to be dark and drab in here,” Waters says. “Now it’s nice and clean. I don’t mind sitting here anymore.” Stores have also extended hours: 34% of the company’s 14,000 U.S. restaurants are now open 24/7.”
Earnings are due out next Monday. Wall Street’s consensus is for 83 cents a share, which is a nice improvement over the 73 cents a share from last year.