MCD is in big trouble. May not exist in 5 years

Discussion in 'Stocks' started by hajimow, Apr 15, 2015.

  1. clacy


    You're truly an idiot if you think that McDonald's will be gone in 5 years. As a company, their LARGEST (by far) revenue comes from royalties paid by franchisees. Even if sales dip for the next decade, they will still be a very viable company because of that revenue stream.

    They have probably peaked as a company, and I'm certainly not saying they are a good stock to own, but they will exist for a minimum of 30 years (and probably much longer).
    #21     Apr 15, 2015
    blakpacman likes this.
  2. hajimow


    Exactly and the royalty fee depends on the sales of each franchisee and it has been down in the last 6 quarter. But to give credit to your theory, when Herbalife can still exist and its stock be over $40, maybe MCD can stay longer but don't rule out the possibility that big businesses can come and then vanish.
    #22     Apr 16, 2015
  3. hajimow


    This is a link to an article that is talking about what I said in one of my earlier posts that Teens would rather to go to Starbucks and have a drink than have a fries in McDonald.

    Another subject: McDonald is a recongnized brand but it does not mean that people trust it or love it. It does not mean that if you can proudly take your date to McDonald !!. It does not mean that you want to have the McDonald logo on your shirt or sweater or jacket. You wont mind to have Ferrari or Porsche logo but definitely not McDonald.
    Another subject: The downtrend on McDonald has started 18 months ago. If it was a sudden glitch, like what usually happens in a car manufacturing business and then they fix it, you could still have hope but since this has been a lingering problem for a long time and seems that it will last for a foreseeable future, you have to take it seriously.
    #23     Apr 16, 2015
  4. hajimow


  5. hajimow


    Even I did not carefully read the news. It says sales are down 30% (in Japan). That means one third of sales. that is terrible.
    "Q1 comparable-store sales fell just over 30% for the beleaguered restaurant chain."
    #25     Apr 16, 2015
  6. Most of the college kids I hang out with seem to prefer Taco Bell; they have a nice $1 menu with great value. Nice thing about McD is that you know pretty much what you're going to get. I tend to eat there while traveling. I suppose if there were more Taco Times I'd go there instead.

    As far as the nutrition goes, when I worked heavy construction we all ate at McDs and ordered huge meals with fries, a shake and the largest high fructose corn syrup sweetened drink they'd give us. We refilled the drinks on the way out. And all of us had a hell of a lot more muscle than fat. The reason people are so fat nowadays is that they live lives of leisure while eating the diet of a working man.

    But all in, I think the original poster is right. MCD is doomed. The problem is that the fast food market has fragmented too much. You can make good money as a boutique hamburger chain, or a pizza chain, or by specializing in mexican-american food, etc., but the market MCD sells into has been fragmented. And there's really no solution to that except specializing themselves. The only solution I can see is pushing towards a boutique hamburger chain. To do that, they'd keep most of their standard burgers and add some selections stolen from a recently very successful hamburger IPO. But then the question is one of marketing. MCD markets to children which is somewhat incompatible with fancy burgers. And as far as marketing to children, the number of children seem to be in decline and that market is probably saturated already. So I do see them as having a rough go the next 10 years, and I can imagine them going away. Right there with other companies, much older, that in my youth no one thought would ever fail.
    #26     Apr 16, 2015
    hajimow likes this.
  7. 377OHMS


    I doubt they face existential threat but I have noticed the reduction in size of their products, the Big Mac is now about half the diameter of a Whopper and the stores themselves are nasty. Personally I gave up McD and Taco Bell some time ago, its like russian roulette with diarrhea.
    #27     Apr 16, 2015
    Ditch likes this.
  8. hajimow


    The best idea that MCD has come up so far is to make a burger with dozens of meat patties. Check out the hidden menu that was posted in this thread. It is ridiculous and disgusting.
    #28     Apr 16, 2015
  9. hajimow


    I also used "May" in the title of my thread. Although I believe it is very likely. in 1999, AAPL was a miserable stock and if you told anyone that AAPL will be added to DOW in 15 years, you would get a slap on your face. Bre-X Mineral the biggest gold company in the world died in 2 weeks in 1997 !!. I am not comparing MCD to Bre-X Mineral but I am giving you examples of possibilities. MCD can go out of business as Roman empire did.
    Fact sheet:
    1- Is MCD growing ? No. actually they are shrinking and the plan is to close some branches.
    2- Is MCD in trouble? yes for over 18 months
    3- How big is the trouble? Very big. They have lost 30% of their business just in Japan and have similar issues in Russia and China. Competition is also growing
    4- Is MCD brand appealing? Not anymore and you can find it out by checking branch traffics.
    My short term prediction is that in the next 3 business days, MCD will be more volatile and mostly in down trend till they announce the numbers in April 22. I don't see the possibility of dividend increase and even if they do, if the earning does not justify it, it would be meaningless.
    #29     Apr 16, 2015
    TooOldForThis likes this.
  10. Chris Mac

    Chris Mac

    Ok, so you better retitle : "MCD ready for a bear market?".
    Because there is no interest to make "may" posts.
    MCD "may" go bankrupt
    Wall Street "may" disappear
    Earth "may" implode one day
    You "may" be as rich as Warren Buffet one day

    Chris Mac
    #30     Apr 17, 2015
    blakpacman likes this.