Skip to content

Why McDONALD’S wins in any economy – Fortune Management

August 23, 2011

French fries do not reflect actual earnings-per-share gains.

Since Skinner, 66, became CEO in 2004, the company has delivered an annual growth rate of 5%, with revenue topping $24 billion last year. Same-store sales, a closely watched industry metric, have climbed each of the seven years of his tenure, and in that time the stock has returned more than 250% — even after the early-August equities selloff — vs. 16% for the S&P 500 (SPX)

Why McDonald’s wins in any economy

Thanks to Jim Skinner’s no-nonsense leadership, the global restaurant juggernaut is doing better than ever.

August 23, 2011: 5:00 AM ET

By Beth Kowitt, writer-reporter

FORTUNE — Jim Skinner, CEO of McDonald’s, is inspecting the kitchen of one of his restaurants in Oak Brook, Ill., with the rigor many of his peers might reserve for financial reports. He examines the food-preparation area as he explains, in great detail, the “review of the hash browns” that McDonald’s initiated a few years ago — and admonishes me to not touch anything. “Unless you feel like you want to have a job,” he adds. McDonald’s, after all, is one of the few places hiring these days.

Skinner isn’t a micromanager. He’s simply intensely focused on the efficiency and performance of McDonald’s (MCD) 33,000 restaurants worldwide and the enormous, complex infrastructure that supports them, a managerial trait that has resulted in nothing short of a Golden Age for the Golden Arches. Since Skinner, 66, became CEO in 2004, the company has delivered an annual growth rate of 5%, with revenue topping $24 billion last year. Same-store sales, a closely watched industry metric, have climbed each of the seven years of his tenure, and in that time the stock has returned more than 250% — even after the early-August equities selloff — vs. 16% for the S&P 500 (SPX). [Click here to read our 2005 story about how McDonald’s got CEO succession right.]

If you haven’t been in a McDonald’s lately, you might assume that the company simply has been the beneficiary of the struggling economy in the U.S. and elsewhere in the world, and that cost-conscious consumers are flocking to fast-food eateries instead of sit-down restaurants. But to post the kind of impressive numbers McDonald’s has — and to weather the current turmoil — Skinner has had to find ways to attract new diners while retaining the hard-core Big Mac-and-fries crowd. And so today, along with burgers and shakes, you can stroll into a McDonald’s and pick up a snack wrap or a fruit smoothie or a decent latte (much to Starbucks’ chagrin), all of which translates into higher sales per location. Last year average per-store sales jumped to $2.4 million, from $1.6 million in 2004.

via Why McDonald’s wins in any economy – Fortune Management.

Advertisements

Comments are closed.

%d bloggers like this: