Most of us have seen the clips or maybe the movie of the beginnings of McDonald’s. Roy Kroc sold milkshake mixers from an office in the Chicago area and he had a large order from the McDonald’s Restaurant in California. He could not believe the order and went on a road trip to California. Mr. Kroc was overwhelmed with the efficiencies of the original McDonald’s restaurant and for 25 cents he could buy a burger, fries and a coke. The brothers who owned McDonald’s kept coming up with improvements to their one restaurant but were not interested in expanding. This is the classic case of every small business, do you want to stay small, or do you want to grow? There are advantages and disadvantages with both. The McDonald’s wanted to stay small, Mr. Kroc had a vision to grow the company across the country and around the world. If took a few years to determine how to grow profitablity but the rest is history and most of eaten at least once at McDonald’s. For a long time, parents knew the prices were very good and they have clean washrooms for the kids.

In an article by Julie Creswell of the New York Times News Service, McDonald’s is the top of the fast food market, but when is fast food too expensive? It is tough decision by McDonald’s executives because they have to concern what the government determines is a minimum wage and keep a hamburger, fries and coke close to a hour’s pay. If the price goes up, the number of times the person will come in falls. Who does the restaurant appeal to?

McDonald’s CEO Chris Kempczinski told Wall Street analysts, when people drive up or come in the store and see the combo prices about $10 is the price too expensive?

McDonald’s introduced $5 meals and wraps at lower prices and that propelled McDonald’s sales upwards. The company reported global same store sales up 3.8%. Sales in the US were up 2.5%.

Breakfast sales were down, Mr. Kempczinski said breakfast was the most economically senstive time of a consumer’s day. People can decide to skip breakfast or eat at home.

Global sales for McDonald’s was $6.8 billion up 5% from a year earlier and profits rose 11% to $6.8 billion.

Most stores across the world are not corporate stores but owned by the franchisees or 93%. Under the franchise agreement prices are set by the individual store as well as the individual business owner has to incur the rising prices of labor, food and fees paid to McDonald’s to operate their businesses.

In the world of retail there is always something being tested such as variety of cold coffees, fruity refreshers, crafted sodas and energy drinks. McDonald’s is testing the drinks in 500 stores, and they could be more profitable than the food. If all goes well it will be ramped up to global franchises.

Linking to dividend paying stocks, every company appeals to a certain target market and has to continually reinvent itself to ensure the target market stays repeat customers. It is one of the reasons why retail is interesting to watch and only if the company can be consistently profitable do you want to own the stock. If you do own a retail store, you need to be a customer and ensure when you go into a store the expectations you have as a customer are met and exceeded otherwise look for alternatives.

There are more questions than answers, till the next time – to raising questions.