How is it possible that McDonald's stock is soaring as the stock market is looking so scary? McDonald's not only up by a little bit, it is up over 10% on the year, and up 100% in the last three years. This year being up by between 9-11% is phenomenal, especially considering that we are in a year where we have seen restaurant chain bankruptcies, failures and the tourist industry tanked.
Bank stocks, Airline Stocks, Hotel Stocks, Retail Stocks, Automakers and well you name it things have not been pretty on Wall Street. Yet, McDonald's is screaming along, but why you ask? Well, they are an efficient and well oiled machine, with a superior distribution chain and their franchisees are competitive, strong and as hungry as their customers. But, certainly that's not all, McDonald's is also good at something else.
McDonald's is aggressive in the market place and is not afraid of a price war, knowing they are one of the most efficient Fast Food Restaurants in the QSR (quick service restaurant) sector. Their "low down" menu speaks directly to the consumer and they are giving the customer exactly what they want.
A consumer that is feeling the pinch of high food prices and high gasoline costs and needs a break, and there is McDonald's smiling back at them and giving them exactly what they want; a good deal, a value, and giving them a fair price! Of course, no one should be so surprised that McDonald's does well in both an up or a down economy, after all they have been at it a while and have been through heaven knows how many business cycles.
The fact is that Ray Kroc started franchising McDonald's Hamburger Restaurants in a down economy, perhaps, that is why to this day, McDonald's is so efficient, that it can weather nearly any storm. Think on that, because that my friends is the power of franchising.