Description
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the actual corporation itself. The McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, the company had annual revenues of $27.5 billion and profits of $5.5 billion.
Team 1:
Chris Athens
Ben Baker
Chris Bolinger
Josh Carver
Jordan Guenther
Jeff Ward
McDonald’
s
History
• 1948 !"#onald $rothers o%en the first !"#onald&s and names '%eedee as
their "om%an( image)
• 19*4 +a( ,ro"k- a multimi.er salesman $e"omes the fran"hising agent)
• 19**/ +a( ,ro" o%ens the #es 0laines restaurant) The 1st da(&s revenues /
1233)14
• 19*5 +a( ,ro" hands out free ham$urgers to 'alvation Arm( guests
• 19*8 'ales gro6 1*17
• 1931 +a( ,ro" $u(out the !"#onalds $rothers for 14)5 million
• 1932 +onald !"#onald is introdu"ed
• 193* / !"#onald&s goes %u$li" 6ith the "om%an(&s first offering on the sto"k
e."hange for 144)*8 %er share)
9irst television "ommer"ial is aired
•
htt%:::666)(outu$e)"om:6at"h;vT?@Ask
• 1933 !"#onald&s sto"ks s%lit for the first time)
• 1935 / Big !a" invented
!"#onald&s in Canada and 0uerto +i"o o%en
• 1951 / B!akadonaldoC DJa%anE
• 1952 / Fgg !"!uffin invented
• 1954 / +onald !"#onald Gouse o%ened
• 1959 / Ga%%( !eals introdu"ed
• 1959/%resent / Continued gro6th
History
0ro$lems
• Customer 'ervi"e
!"#onald&s is "urrentl( ranked last amongst its
to% "om%etitors in the 99G+ su$se"tor)
• H1 Burger ,ing
• H4 Wend(&s
• H2 !"#onald&s
This ma( not sound $ad at first glan"e- $ut
6hen (ou look at the fa"t that these three
"om%etitors hold 527 of the 99G+ market- it
%uts it into %ers%e"tive)
0ro$lems D"ont)E
• Gealth Issues
'WJT Anal(sis / 'trengths
• World6ide Brand +e"ognition
• 417 of all fast/food visits are for ham$urgers
!"#onald&s has 447 of ?' fast/food ham$urger
$usiness
• Jver 587 of the restaurants are inde%endentl( o6ned
• +anked num$er one in 9ortune magaKine&s 4888 list of
Bmost admired food servi"e "om%anies)C Jverseas
market
• Jver 21-888 restaurants in over 148 "ountries)
• Lualit( measures through su%%l( "hain
management
• Fn"ourage ne6 ideas from 6ithin
Big !a"
Fgg !"!uffin
• Marge availa$le amounts of "a%ital for
future restaurants due to holding a limited
num$er of "or%orate o6ned restaurants)
• F"onomies of s"ale
'WJT Anal(sis 'trengths D"ontE
'WJT Anal(sis / Weaknesses
• Weak %rodu"t develo%ment
• 0oor relationshi%s 6ith
fran"hisees
• 9lu"tuations in %rofit
D6hi"h has $een im%roved
in 4888 after the
fran"hising of man(
"or%orate o6ned
restaurantsE
• International e.%ansion through "ontinued
fran"hise o%%ortunities
Jnl( serving 17 of the 6orld&s %o%ulation
• Gro6th in the $everage industr( D$( 4811 /
151)4 $illion in sales 6ith 58)87 $eing
"offee drinksE
• Introdu"tion of lo"al offerings Di)e) Te"h
Burger 6ith s%e"ial "ondiments and to%%ingsE
'WJT Anal(sis /
J%%ortunities
• !ature industr(
• 'trength of "om%etition
• !ore health/"ons"ious "onsumers
• Changing demogra%hi"s
• 9lu"tuation of foreign e."hange rates
• In"reasing "ommodit( and fuel %ri"es
'WJT Anal(sis / Threats
Com%etition
• To%
Burger ,ing 147
Wend(&s 127
• Jther strong "om%etitors
'oni" 37
Ja"k in the Bo. 47
Gardee&s 27
White Castle 17
!arketing Te"hniAues
• 0rodu"t BImageC
• Customers asso"iate 6ith the $rand
• #omesti"
• Glo$al
!arketing Te"hniAues
D"ont)E
• Jriginal s(m$ol B'%eedeeC
• Golden Ar"hes
• Building stru"ture and "olors
• Mo"al advertising
'logans
• BNour kind of %la"eC D1935E
• BNou deserve a $reak toda(C D1951E
• BWe do it all for (ouC D193*E
• BGave (ou had (our $reak toda(C D199*E
• BI&m lovin itC D4882E
!arketing !i.
• 9ive 0&s
• !arketing and Communi"ations
• +es%onsi$ilit(
• !"'%irit Oights
• Commer"ials
• Atmos%here
Glo$al !arketing
• Oational !arketing Cam%aign
• !arketing/
Oorth Ameri"a
Gong ,ong
9ran"e
Australia
Catering to lo"al needs a"ross sea&s
Management In
McDonald’s
Ray Kroc
• BThe Aualit( of a leader is refle"ted in the
standards the( set for themselvesC
• BWe take the ham$urger $usiness more
seriousl( than an(one elseC
• BNouPre onl( as good as the %eo%le (ou hireC
• BIf there is time to lean there is time to
"leanC
Hamburger University
“McDonald’s Center of Training
Ecellence!
• Created $( 9red Turner and +a( ,ro" in
1931
• All levels of managers in the !"#onald&s
famil( go through training at this fa"ilit()
BAt !"#onald&s- our training mission is to $e the $est
talent develo%er of %eo%le 6ith the most "ommitted
individuals to Lualit(- 'ervi"e- Cleanliness and Qalue
DL'CRQE in the 6orld) Jur strong "ommitment to the
training and develo%ment of our %eo%le has resulted in
man( BfirstsC and honors)C
Management Continued
• Gam$urger ?niversit( has given em%hasis to
"onsistent restaurant o%erations %ro"edures-
servi"e- Aualit( and "leanliness)
• Be"ause of it&s su""ess G)?) has $e"ome the
glo$al "enter of e."ellen"e for !"#onald&s
o%erations training and leadershi% develo%ment)
• With this training it "reates unit( for the CFJ
to the lo"al store manager- the( all have the
same goals in mind 6hi"h isSSSSS)
Being the $est means %roviding outstanding
Aualit(- servi"e- "leanliness- and value- so that
6e make ever( "ustomer in ever( restaurant
smile) And $( doing this 6e are our
"ustomersP favorite %la"e and 6a( to eat)T
9inan"ial Gealth
• We looked at 4 maUor as%e"ts of finan"ial
health of !"#onald&s and their "om%etitors
MiAuidit(
Meverage
+ates of +eturn
'to"k !arket +atios
• We also took Altman&s @/'"ore into
a""ount to see ho6 health( these
"om%anies 6ere during the re"ession)
MiAuidit(
• The a$ilit( to meet "urrent o$ligations
• We took into a""ount the Current +atio and
the Lui"k +atio)
• Current +atio < Current Assets:Current
Mia$ilities)
• Lui"k +atio < D"ash V marketa$le se"urities V
net re"eiva$lesE : Current Mia$ilities
Current +atio in 4888
Lui"k +atio for 4888
• WIf the "urrent ratio is a$ove 1- and the Aui"k ratio is
$elo6 1- then a manager ma( need to look at the valuation
of inventor( or the inventor( turnover)
Meverage
• The ratios $et6een de$t and eAuit( 6hi"h
%rovides information a$out $ankru%t"()
• We 6ill look at the #e$t/to Asset +atio
and the #e$t/to/FAuit( +atio
• #e$t/to/Asset < Total Mia$ilities:Total
Assets
• #e$t/to/FAuit( < Mong/term
#e$t:'hareholder&s FAuit(
!eaning of +atios
• #e$t/to/Asset sho6s 6hether assets are finan"ed
through eAuit(- value under 1- or finan"ed through
de$t- a value a$ove 1)
A$ove 1- might mean trou$le if the "om%an( is
under %ressure)
• #e$t/to/FAuit( sho6s 6hether a "om%an( "an
generate ne6 funds from the "a%ital market)
A higher ratio means a "om%an( is thought to
have smaller ne6/finan"ing "a%a"it( and 6ill
have trou$le finding future finan"ing funding)
#e$t/to/Asset for 4888
#e$t/to/FAuit( for 4888
• 'JOC had a /11)44 ratio largel( due a $u( $a"k of
treasur( sto"k- $e"ause the( thought their sto"k
6as undervalued)
Altman&s @/'"ore
• The s"ore anal(Kes the future su""ess or
failure of a "om%an()
• @/'"ore <
A . 2)2 V B . 8)99 V C . 8)3 V # . 1)4 V F . 1)4
• A< FBIT:Total Assets
• B< Oet 'ales:Total Assets
• C< !arket Qalue of FAuit
Total Mia$ilities
• #< Working Ca%ital:Total Assets
• F< +etained Farnings:Total Assets
Fvaluation of '"ore
• '"ore X 1)8 indi"ates $ankru%t"( is high
• '"ore Y 1)8 $ut X 4)5 $ankru%t"( is fair
• '"ore Y4)5 $ut X 2)8 $ankru%t"( is %ossi$le-
$ut not likel(-
• '"ore Y 2)8 indi"ates $ankru%t"( is lo6 and
"om%an( is in good health)
•
!"#onalds '"ore 6as 2)84 for 4888)
+eturn on Assests
• +eturn on assets D+JAE is an indi"ator of
ho6 %rofita$le a "om%an( is relative to its
total assets)
• +JA gives "om%anies and organiKations an
idea as to ho6 effi"ient their management
is at using their assets to "reate earnings)
• In order to "al"ulate return on assets- (ou
must divide a "om%an(Ps annual earnings $(
its total assets[ +JA is dis%la(ed as a
%er"entage)
+eturn on Assets
• +JA tells (ou 6hat earnings 6ere %rodu"ed
from invested "a%ital or assets)
• +JA for %u$li" "om%anies "an var(
su$stantiall( and 6ill $e highl( de%endent
on the industr()
• This is 6h( 6hen using +JA as a
"om%arative measure- it is $est to "om%are
it against a "om%an(Ps %revious +JA
num$ers or the +JA of a similar "om%an(
+eturn on Assets
"##$ R%& ' year &verage
MacDonald’s 1*)47 18)*7
(onic 18)37 18)27
)urger King 5)187 2)487
*ac+ in t,e )o 5)387 5)487
-endy’s /18)27 /4)*87
+eturn on Assets
• This sho6s that if !a"#onald&s net in"ome 6as
generated from their total value of assets- the
return 6ould $e right around 1* "ents %er dollar) It
is also a great indi"ator of ho6 effi"ient
!a"#onald&s is at using their assets to generate
in"ome)
• Jn the other side ho6ever- Wend(&s 6ould sho6 a
lose of 18 "ents on the dollar if their net in"ome is
$ased off their total value of assets) 'oni" 6ould
have a gain of 18 "ents on the dollar 6hile $oth
Burger ,ing and Ja"k in the Bo. 6ould have 5 "ents
gain on the dollar)
+eturn on FAuit(
• The amount of net in"ome returned as a
%er"entage of shareholders eAuit()
• +eturn on eAuit( measures a "or%orationPs
%rofita$ilit( $( sho6ing ho6 mu"h %rofit a
"om%an( makes 6ith the mone( shareholders have
invested)
• +JF is e.%ressed as a %er"entage and "al"ulated
$( dividing net in"ome $( shareholdersP eAuit()
• +JF is useful for "om%aring the %rofita$ilit( of a
"om%an( to that of other firms in the same
industr()
+eturn on FAuit(
• These num$ers tell us ho6 mu"h %rofit is $eing
%rodu"ed from mone( that investors have %rovided
to these "om%anies)
• 1*/487 is usuall( "onsidered e."e%tional) 9or
ever( dollar of in"ome 48 "ents "an $e "redited to
the investor&s "a%ital)
• This ratio is often "onsidered the most im%ortant)
The main goal of an( "om%an( is to ma.imiKe
shareholder 6ealth)
• This ratio tells (ou and (our investors ho6 mu"h
mone( (ou are making off their mone()
+eturn on FAuit(
"##$ R%E ' year &verage
MacDonald’s 24)47 48)37
(onic 44)17 23)27
)urger King 48)97 12)87
*ac+ in t,e )o 42)87 19)27
-endy’s /**)97 /41)27
+eturn on FAuit(
• A""ording to the information- 'oni" and
!a"#onald&s are leading the 6a( $( making 44
"ents and 24 "ents for ever( investor&s dollar
res%e"tivel()
• Ja"k in the $o. makes roughl( 42 "ents %er dollar
6hile Burger ,ing makes 48 "ents) All four of
these are "onsidered to $e outstanding)
• Wend(&s is not fairing ver( 6ell) 9or ever( dollar
an investor %uts into Wend(&s- the( are losing
almost *3 "ents in return) That is not 6hat a
"om%an( 6ants to see if the( are looking for
%otential investors)
'to"k !arket +atios
• The three most "ommon ratios used are:
1) 0ri"e/Farnings +atio D0:F +atioE
4) Farnings %er 'hare DF0'E
2) #ividend/Nield +atio
0ri"e/Farnings +atio D0:FE
• The 0:F ratio D%ri"e to earningsE of a sto"k is a
measure of the %ri"e %aid for a s%e"ifi" share-
6hi"h is relative to the annual net in"ome or %rofit
6hi"h is earned $( the "om%an( %er share
• 0:F ratios are segmented $et6een high and lo6
A higher 0:F ratio means that investors are
%a(ing more mone( for ea"h unit of net in"ome
Therefore- the sto"k is more e.%ensive if
"om%ared to another sto"k 6ith a lo6er 0:F
ratio
!"#onald&s 0:F +atio
• !"#onald&s has a "urrent 0:F ratio of 1*)1)
Go6ever- the "om%an(&s 0:F ratio for fis"al
(ear end 4888 6as 48)8)
either the sto"k is overvalued or the
"om%an(Ps earnings have in"reased sin"e
the last earnings figure 6as %u$lished
'oni" Co) 0:F +atio
• 'oni" Cor%oration has a "urrent 0:F ratio
of 14)4) The "om%an(&s 0:F ratio for fis"al
(ear 4888 6as 44)*
An end of (ear 0:F ratio $et6een 15/4*
6ill usuall( indi"ate a gro6th sto"k- 6ith
earnings e.%e"ted to in"rease
su$stantiall( in the near future
Burger ,ing R Ja"k in the
Bo.&s 0:F +atios
• The t6o "om%an(&s "urrent 0:F ratios are
15)2 and 12)* and their end of (ear ratios
6ere 44)1 and 41)4 res%e"tivel(
Investors are ho%ing that $oth of these
sto"ks 6ill $e gro6th sto"ks that 6ill
in"rease su$stantiall( in the near future
Wend(&s:Ar$(&s 0:F +atios
• At the end of fis"al (ear 4888- this
"om%an(&s 0:F ratio 6as 25)2
A "om%an( 6hose shares have an e.tremel( high 0:F
ratio have high e.%e"ted future gro6th in overall
earnings- or the sto"k ma( $e su$Ue"t to a Bs%e"ulative
$u$$leC
These sto"ks have the %otential to trade in high volumes
at %ri"es that are "onsidera$l( different than the
intrinsi" values
Farnings 0er 'hare DF0'E
• Farnings %er share are the earnings 6hi"h
are returned on the initial investment
amount) This is "al"ulated $
F0' < Dnet in"ome / %referred dividendsE
:"ommon shares outstanding
9ast 9ood Industr(&s F0'
Com%an( #ate A"tual F0' Mast AQG
Fstimate
!"#onald&s #e") 4888 2)53 2)32
'oni" Aug) 4888 8)95 8)98
Burger ,ing Jun) 4888 1)28 1)2*
Wend(&s:Ar$(&s #e") 4888 /8)5* 8)12
Ja"k in the Bo. 'e%) 4888 4)81 4)88
What #oes This !ean;
• !"#onald&s has re%orted an average annual
in"rease in its F0' sin"e 1998
This makes !"#onald&s more a%%ealing to an
investor $e"ause the $asis of the F0' ratio is
the earnings 6hi"h are returned on the initial
investment
!"#onald&s F0' Jver the
Mast #e"ade
#ividend/Nield +atio
• The dividend (ield on a "om%an( sto"k is the
"om%an(&s annual dividend divided $( %ri"e %er share
Com%an( 0ri"e:'hare Annual #ividend #ividend Nield
!"#onald&s 1*4)84 14)88 2)3*7
'oni" OA OA OA
Burger ,ing 144)38 18)4* 1)187
Wend(&s:Ar$(&s 1*)28 18)83 1)127
Ja"k in the Bo. OA OA OA
Go6 #oes This Affe"t
!"#onald&s;
• !"#onald&s has $een "onsistentl( in"reasing its
dividends for the %ast thirt( (ears
9rom 1998- u% until 4885- this dividend gro6th sto"k has
delivered an annual average total return of 117 to its
shareholders
Jver the %ast ten (ears- the annual dividend %a(ments
have in"reased $( an average of almost 4*7 annuall(-
6hi"h is mu"h higher than the $efore mentioned gro6th
in F0'
• This 4*7 gro6th in dividends translates into
!"#onald&s dividend %a(ment dou$ling nearl( ever(
three (ears
#u%re Flementar(
1
st
grade "lass
• BIf (ou "ould eat at !"#onald&s or Burger
,ing for lun"h toda(- 6hi"h one 6ould (ou
%i"k;C
947 res%onded B!C#JOAM#'C 6ith
thunderous "heers
37 res%onded BBurger ,ingC 6ithout
mu"h enthusiasm
BGet the kidsSand the
%arents 6ill follo6)C
0ast 'trategies
• 0rodu"t #evelo%ment
Gits: 9ries- Ga%%( !eal- Big !a"- Fgg
!"!uffin- 'alads- A%%le 'li"es- Nogurt
0arfaits- R 0romotions
!isses: !"0iKKa- 9aUita- Carrot 'ti"ks- !"Mean-
and the Ar"h #elu.e
0ast 'trategies D"ont)E
• !arket #evelo%ment
Git: International gro6th
!iss: Jver/e.%ansion in ?'
• Alternative lo"ations
• 9or6ard Integration
#istri$ution through fran"hisees 6ith
"ontrol over store %resentation- menu
items
Oe6 'trategies
0rodu"t #evelo%ment: 9o"us on "ore
$usiness
Lualit( and taste issues
• 9ood deliver( methods
9amil( Qalue !eal
• Thursda(&s 11)*9 Ga%%( !eal
Oe6 'trategies D"ont)E
• +edevelo% 9ran"hisee +elationshi%s
• !arket 0enetration and #evelo%ment
Continue International e.%ansion
• Cost +edu"tions
Gome offi"e "ost redu"tions
9ran"hising "or%orate o6ned restaurants
+e"ommendations
• Im%rovements in:
Customer 'ervi"e
• 9o"us on team- not individuals
• +e6ard the $ehavior that (ou 6ant
Training:Com%ensation
• Training in "ustomer servi"e- s%eed and a""ura"(
• In"rease %a( to attra"t more Aualified a%%li"ants
Te"hnolog(
• Im%rovement of order verifi"ation s(stem
Continued Gro6th of International !arket
Thank (ou from Team 1
doc_254707002.ppt
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the actual corporation itself. The McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, the company had annual revenues of $27.5 billion and profits of $5.5 billion.
Team 1:
Chris Athens
Ben Baker
Chris Bolinger
Josh Carver
Jordan Guenther
Jeff Ward
McDonald’
s
History
• 1948 !"#onald $rothers o%en the first !"#onald&s and names '%eedee as
their "om%an( image)
• 19*4 +a( ,ro"k- a multimi.er salesman $e"omes the fran"hising agent)
• 19**/ +a( ,ro" o%ens the #es 0laines restaurant) The 1st da(&s revenues /
1233)14
• 19*5 +a( ,ro" hands out free ham$urgers to 'alvation Arm( guests
• 19*8 'ales gro6 1*17
• 1931 +a( ,ro" $u(out the !"#onalds $rothers for 14)5 million
• 1932 +onald !"#onald is introdu"ed
• 193* / !"#onald&s goes %u$li" 6ith the "om%an(&s first offering on the sto"k
e."hange for 144)*8 %er share)
9irst television "ommer"ial is aired
•
htt%:::666)(outu$e)"om:6at"h;vT?@Ask
• 1933 !"#onald&s sto"ks s%lit for the first time)
• 1935 / Big !a" invented
!"#onald&s in Canada and 0uerto +i"o o%en
• 1951 / B!akadonaldoC DJa%anE
• 1952 / Fgg !"!uffin invented
• 1954 / +onald !"#onald Gouse o%ened
• 1959 / Ga%%( !eals introdu"ed
• 1959/%resent / Continued gro6th
History
0ro$lems
• Customer 'ervi"e
!"#onald&s is "urrentl( ranked last amongst its
to% "om%etitors in the 99G+ su$se"tor)
• H1 Burger ,ing
• H4 Wend(&s
• H2 !"#onald&s
This ma( not sound $ad at first glan"e- $ut
6hen (ou look at the fa"t that these three
"om%etitors hold 527 of the 99G+ market- it
%uts it into %ers%e"tive)
0ro$lems D"ont)E
• Gealth Issues
'WJT Anal(sis / 'trengths
• World6ide Brand +e"ognition
• 417 of all fast/food visits are for ham$urgers
!"#onald&s has 447 of ?' fast/food ham$urger
$usiness
• Jver 587 of the restaurants are inde%endentl( o6ned
• +anked num$er one in 9ortune magaKine&s 4888 list of
Bmost admired food servi"e "om%anies)C Jverseas
market
• Jver 21-888 restaurants in over 148 "ountries)
• Lualit( measures through su%%l( "hain
management
• Fn"ourage ne6 ideas from 6ithin
Big !a"
Fgg !"!uffin
• Marge availa$le amounts of "a%ital for
future restaurants due to holding a limited
num$er of "or%orate o6ned restaurants)
• F"onomies of s"ale
'WJT Anal(sis 'trengths D"ontE
'WJT Anal(sis / Weaknesses
• Weak %rodu"t develo%ment
• 0oor relationshi%s 6ith
fran"hisees
• 9lu"tuations in %rofit
D6hi"h has $een im%roved
in 4888 after the
fran"hising of man(
"or%orate o6ned
restaurantsE
• International e.%ansion through "ontinued
fran"hise o%%ortunities
Jnl( serving 17 of the 6orld&s %o%ulation
• Gro6th in the $everage industr( D$( 4811 /
151)4 $illion in sales 6ith 58)87 $eing
"offee drinksE
• Introdu"tion of lo"al offerings Di)e) Te"h
Burger 6ith s%e"ial "ondiments and to%%ingsE
'WJT Anal(sis /
J%%ortunities
• !ature industr(
• 'trength of "om%etition
• !ore health/"ons"ious "onsumers
• Changing demogra%hi"s
• 9lu"tuation of foreign e."hange rates
• In"reasing "ommodit( and fuel %ri"es
'WJT Anal(sis / Threats
Com%etition
• To%
Burger ,ing 147
Wend(&s 127
• Jther strong "om%etitors
'oni" 37
Ja"k in the Bo. 47
Gardee&s 27
White Castle 17
!arketing Te"hniAues
• 0rodu"t BImageC
• Customers asso"iate 6ith the $rand
• #omesti"
• Glo$al
!arketing Te"hniAues
D"ont)E
• Jriginal s(m$ol B'%eedeeC
• Golden Ar"hes
• Building stru"ture and "olors
• Mo"al advertising
'logans
• BNour kind of %la"eC D1935E
• BNou deserve a $reak toda(C D1951E
• BWe do it all for (ouC D193*E
• BGave (ou had (our $reak toda(C D199*E
• BI&m lovin itC D4882E
!arketing !i.
• 9ive 0&s
• !arketing and Communi"ations
• +es%onsi$ilit(
• !"'%irit Oights
• Commer"ials
• Atmos%here
Glo$al !arketing
• Oational !arketing Cam%aign
• !arketing/
Oorth Ameri"a
Gong ,ong
9ran"e
Australia
Catering to lo"al needs a"ross sea&s
Management In
McDonald’s
Ray Kroc
• BThe Aualit( of a leader is refle"ted in the
standards the( set for themselvesC
• BWe take the ham$urger $usiness more
seriousl( than an(one elseC
• BNouPre onl( as good as the %eo%le (ou hireC
• BIf there is time to lean there is time to
"leanC
Hamburger University
“McDonald’s Center of Training
Ecellence!
• Created $( 9red Turner and +a( ,ro" in
1931
• All levels of managers in the !"#onald&s
famil( go through training at this fa"ilit()
BAt !"#onald&s- our training mission is to $e the $est
talent develo%er of %eo%le 6ith the most "ommitted
individuals to Lualit(- 'ervi"e- Cleanliness and Qalue
DL'CRQE in the 6orld) Jur strong "ommitment to the
training and develo%ment of our %eo%le has resulted in
man( BfirstsC and honors)C
Management Continued
• Gam$urger ?niversit( has given em%hasis to
"onsistent restaurant o%erations %ro"edures-
servi"e- Aualit( and "leanliness)
• Be"ause of it&s su""ess G)?) has $e"ome the
glo$al "enter of e."ellen"e for !"#onald&s
o%erations training and leadershi% develo%ment)
• With this training it "reates unit( for the CFJ
to the lo"al store manager- the( all have the
same goals in mind 6hi"h isSSSSS)
Being the $est means %roviding outstanding
Aualit(- servi"e- "leanliness- and value- so that
6e make ever( "ustomer in ever( restaurant
smile) And $( doing this 6e are our
"ustomersP favorite %la"e and 6a( to eat)T
9inan"ial Gealth
• We looked at 4 maUor as%e"ts of finan"ial
health of !"#onald&s and their "om%etitors
MiAuidit(
Meverage
+ates of +eturn
'to"k !arket +atios
• We also took Altman&s @/'"ore into
a""ount to see ho6 health( these
"om%anies 6ere during the re"ession)
MiAuidit(
• The a$ilit( to meet "urrent o$ligations
• We took into a""ount the Current +atio and
the Lui"k +atio)
• Current +atio < Current Assets:Current
Mia$ilities)
• Lui"k +atio < D"ash V marketa$le se"urities V
net re"eiva$lesE : Current Mia$ilities
Current +atio in 4888
Lui"k +atio for 4888
• WIf the "urrent ratio is a$ove 1- and the Aui"k ratio is
$elo6 1- then a manager ma( need to look at the valuation
of inventor( or the inventor( turnover)
Meverage
• The ratios $et6een de$t and eAuit( 6hi"h
%rovides information a$out $ankru%t"()
• We 6ill look at the #e$t/to Asset +atio
and the #e$t/to/FAuit( +atio
• #e$t/to/Asset < Total Mia$ilities:Total
Assets
• #e$t/to/FAuit( < Mong/term
#e$t:'hareholder&s FAuit(
!eaning of +atios
• #e$t/to/Asset sho6s 6hether assets are finan"ed
through eAuit(- value under 1- or finan"ed through
de$t- a value a$ove 1)
A$ove 1- might mean trou$le if the "om%an( is
under %ressure)
• #e$t/to/FAuit( sho6s 6hether a "om%an( "an
generate ne6 funds from the "a%ital market)
A higher ratio means a "om%an( is thought to
have smaller ne6/finan"ing "a%a"it( and 6ill
have trou$le finding future finan"ing funding)
#e$t/to/Asset for 4888
#e$t/to/FAuit( for 4888
• 'JOC had a /11)44 ratio largel( due a $u( $a"k of
treasur( sto"k- $e"ause the( thought their sto"k
6as undervalued)
Altman&s @/'"ore
• The s"ore anal(Kes the future su""ess or
failure of a "om%an()
• @/'"ore <
A . 2)2 V B . 8)99 V C . 8)3 V # . 1)4 V F . 1)4
• A< FBIT:Total Assets
• B< Oet 'ales:Total Assets
• C< !arket Qalue of FAuit
Total Mia$ilities• #< Working Ca%ital:Total Assets
• F< +etained Farnings:Total Assets
Fvaluation of '"ore
• '"ore X 1)8 indi"ates $ankru%t"( is high
• '"ore Y 1)8 $ut X 4)5 $ankru%t"( is fair
• '"ore Y4)5 $ut X 2)8 $ankru%t"( is %ossi$le-
$ut not likel(-
• '"ore Y 2)8 indi"ates $ankru%t"( is lo6 and
"om%an( is in good health)
•
!"#onalds '"ore 6as 2)84 for 4888)
+eturn on Assests
• +eturn on assets D+JAE is an indi"ator of
ho6 %rofita$le a "om%an( is relative to its
total assets)
• +JA gives "om%anies and organiKations an
idea as to ho6 effi"ient their management
is at using their assets to "reate earnings)
• In order to "al"ulate return on assets- (ou
must divide a "om%an(Ps annual earnings $(
its total assets[ +JA is dis%la(ed as a
%er"entage)
+eturn on Assets
• +JA tells (ou 6hat earnings 6ere %rodu"ed
from invested "a%ital or assets)
• +JA for %u$li" "om%anies "an var(
su$stantiall( and 6ill $e highl( de%endent
on the industr()
• This is 6h( 6hen using +JA as a
"om%arative measure- it is $est to "om%are
it against a "om%an(Ps %revious +JA
num$ers or the +JA of a similar "om%an(
+eturn on Assets
"##$ R%& ' year &verage
MacDonald’s 1*)47 18)*7
(onic 18)37 18)27
)urger King 5)187 2)487
*ac+ in t,e )o 5)387 5)487
-endy’s /18)27 /4)*87
+eturn on Assets
• This sho6s that if !a"#onald&s net in"ome 6as
generated from their total value of assets- the
return 6ould $e right around 1* "ents %er dollar) It
is also a great indi"ator of ho6 effi"ient
!a"#onald&s is at using their assets to generate
in"ome)
• Jn the other side ho6ever- Wend(&s 6ould sho6 a
lose of 18 "ents on the dollar if their net in"ome is
$ased off their total value of assets) 'oni" 6ould
have a gain of 18 "ents on the dollar 6hile $oth
Burger ,ing and Ja"k in the Bo. 6ould have 5 "ents
gain on the dollar)
+eturn on FAuit(
• The amount of net in"ome returned as a
%er"entage of shareholders eAuit()
• +eturn on eAuit( measures a "or%orationPs
%rofita$ilit( $( sho6ing ho6 mu"h %rofit a
"om%an( makes 6ith the mone( shareholders have
invested)
• +JF is e.%ressed as a %er"entage and "al"ulated
$( dividing net in"ome $( shareholdersP eAuit()
• +JF is useful for "om%aring the %rofita$ilit( of a
"om%an( to that of other firms in the same
industr()
+eturn on FAuit(
• These num$ers tell us ho6 mu"h %rofit is $eing
%rodu"ed from mone( that investors have %rovided
to these "om%anies)
• 1*/487 is usuall( "onsidered e."e%tional) 9or
ever( dollar of in"ome 48 "ents "an $e "redited to
the investor&s "a%ital)
• This ratio is often "onsidered the most im%ortant)
The main goal of an( "om%an( is to ma.imiKe
shareholder 6ealth)
• This ratio tells (ou and (our investors ho6 mu"h
mone( (ou are making off their mone()
+eturn on FAuit(
"##$ R%E ' year &verage
MacDonald’s 24)47 48)37
(onic 44)17 23)27
)urger King 48)97 12)87
*ac+ in t,e )o 42)87 19)27
-endy’s /**)97 /41)27
+eturn on FAuit(
• A""ording to the information- 'oni" and
!a"#onald&s are leading the 6a( $( making 44
"ents and 24 "ents for ever( investor&s dollar
res%e"tivel()
• Ja"k in the $o. makes roughl( 42 "ents %er dollar
6hile Burger ,ing makes 48 "ents) All four of
these are "onsidered to $e outstanding)
• Wend(&s is not fairing ver( 6ell) 9or ever( dollar
an investor %uts into Wend(&s- the( are losing
almost *3 "ents in return) That is not 6hat a
"om%an( 6ants to see if the( are looking for
%otential investors)
'to"k !arket +atios
• The three most "ommon ratios used are:
1) 0ri"e/Farnings +atio D0:F +atioE
4) Farnings %er 'hare DF0'E
2) #ividend/Nield +atio
0ri"e/Farnings +atio D0:FE
• The 0:F ratio D%ri"e to earningsE of a sto"k is a
measure of the %ri"e %aid for a s%e"ifi" share-
6hi"h is relative to the annual net in"ome or %rofit
6hi"h is earned $( the "om%an( %er share
• 0:F ratios are segmented $et6een high and lo6
A higher 0:F ratio means that investors are
%a(ing more mone( for ea"h unit of net in"ome
Therefore- the sto"k is more e.%ensive if
"om%ared to another sto"k 6ith a lo6er 0:F
ratio
!"#onald&s 0:F +atio
• !"#onald&s has a "urrent 0:F ratio of 1*)1)
Go6ever- the "om%an(&s 0:F ratio for fis"al
(ear end 4888 6as 48)8)
either the sto"k is overvalued or the
"om%an(Ps earnings have in"reased sin"e
the last earnings figure 6as %u$lished
'oni" Co) 0:F +atio
• 'oni" Cor%oration has a "urrent 0:F ratio
of 14)4) The "om%an(&s 0:F ratio for fis"al
(ear 4888 6as 44)*
An end of (ear 0:F ratio $et6een 15/4*
6ill usuall( indi"ate a gro6th sto"k- 6ith
earnings e.%e"ted to in"rease
su$stantiall( in the near future
Burger ,ing R Ja"k in the
Bo.&s 0:F +atios
• The t6o "om%an(&s "urrent 0:F ratios are
15)2 and 12)* and their end of (ear ratios
6ere 44)1 and 41)4 res%e"tivel(
Investors are ho%ing that $oth of these
sto"ks 6ill $e gro6th sto"ks that 6ill
in"rease su$stantiall( in the near future
Wend(&s:Ar$(&s 0:F +atios
• At the end of fis"al (ear 4888- this
"om%an(&s 0:F ratio 6as 25)2
A "om%an( 6hose shares have an e.tremel( high 0:F
ratio have high e.%e"ted future gro6th in overall
earnings- or the sto"k ma( $e su$Ue"t to a Bs%e"ulative
$u$$leC
These sto"ks have the %otential to trade in high volumes
at %ri"es that are "onsidera$l( different than the
intrinsi" values
Farnings 0er 'hare DF0'E
• Farnings %er share are the earnings 6hi"h
are returned on the initial investment
amount) This is "al"ulated $
F0' < Dnet in"ome / %referred dividendsE
:"ommon shares outstanding
9ast 9ood Industr(&s F0'
Com%an( #ate A"tual F0' Mast AQG
Fstimate
!"#onald&s #e") 4888 2)53 2)32
'oni" Aug) 4888 8)95 8)98
Burger ,ing Jun) 4888 1)28 1)2*
Wend(&s:Ar$(&s #e") 4888 /8)5* 8)12
Ja"k in the Bo. 'e%) 4888 4)81 4)88
What #oes This !ean;
• !"#onald&s has re%orted an average annual
in"rease in its F0' sin"e 1998
This makes !"#onald&s more a%%ealing to an
investor $e"ause the $asis of the F0' ratio is
the earnings 6hi"h are returned on the initial
investment
!"#onald&s F0' Jver the
Mast #e"ade
#ividend/Nield +atio
• The dividend (ield on a "om%an( sto"k is the
"om%an(&s annual dividend divided $( %ri"e %er share
Com%an( 0ri"e:'hare Annual #ividend #ividend Nield
!"#onald&s 1*4)84 14)88 2)3*7
'oni" OA OA OA
Burger ,ing 144)38 18)4* 1)187
Wend(&s:Ar$(&s 1*)28 18)83 1)127
Ja"k in the Bo. OA OA OA
Go6 #oes This Affe"t
!"#onald&s;
• !"#onald&s has $een "onsistentl( in"reasing its
dividends for the %ast thirt( (ears
9rom 1998- u% until 4885- this dividend gro6th sto"k has
delivered an annual average total return of 117 to its
shareholders
Jver the %ast ten (ears- the annual dividend %a(ments
have in"reased $( an average of almost 4*7 annuall(-
6hi"h is mu"h higher than the $efore mentioned gro6th
in F0'
• This 4*7 gro6th in dividends translates into
!"#onald&s dividend %a(ment dou$ling nearl( ever(
three (ears
#u%re Flementar(
1
st
grade "lass
• BIf (ou "ould eat at !"#onald&s or Burger
,ing for lun"h toda(- 6hi"h one 6ould (ou
%i"k;C
947 res%onded B!C#JOAM#'C 6ith
thunderous "heers
37 res%onded BBurger ,ingC 6ithout
mu"h enthusiasm
BGet the kidsSand the
%arents 6ill follo6)C
0ast 'trategies
• 0rodu"t #evelo%ment
Gits: 9ries- Ga%%( !eal- Big !a"- Fgg
!"!uffin- 'alads- A%%le 'li"es- Nogurt
0arfaits- R 0romotions
!isses: !"0iKKa- 9aUita- Carrot 'ti"ks- !"Mean-
and the Ar"h #elu.e
0ast 'trategies D"ont)E
• !arket #evelo%ment
Git: International gro6th
!iss: Jver/e.%ansion in ?'
• Alternative lo"ations
• 9or6ard Integration
#istri$ution through fran"hisees 6ith
"ontrol over store %resentation- menu
items
Oe6 'trategies
0rodu"t #evelo%ment: 9o"us on "ore
$usiness
Lualit( and taste issues
• 9ood deliver( methods
9amil( Qalue !eal
• Thursda(&s 11)*9 Ga%%( !eal
Oe6 'trategies D"ont)E
• +edevelo% 9ran"hisee +elationshi%s
• !arket 0enetration and #evelo%ment
Continue International e.%ansion
• Cost +edu"tions
Gome offi"e "ost redu"tions
9ran"hising "or%orate o6ned restaurants
+e"ommendations
• Im%rovements in:
Customer 'ervi"e
• 9o"us on team- not individuals
• +e6ard the $ehavior that (ou 6ant
Training:Com%ensation
• Training in "ustomer servi"e- s%eed and a""ura"(
• In"rease %a( to attra"t more Aualified a%%li"ants
Te"hnolog(
• Im%rovement of order verifi"ation s(stem
Continued Gro6th of International !arket
Thank (ou from Team 1
doc_254707002.ppt