8 ms·

McDonald’s Has to Do More Than Manipulate Its Stock Price

27 points by riqbal 11y ago

narrator 11y ago
The best thing Mcdonalds could do is to simplify their ingredient lists such that anyone could read them and see that they were composed of boring obvious ingredients. For example, if their fries contained just potatoes, salt and some cooking oil that wasn't canola or cottonseed oil and they advertised it, I'd buy them again. If they wanted to be revolutionary, they could go for certified non-gmo. The world needs boring simple obvious cheap food. People are sick of all the questionable food additive innovation of the last few decades.
- Roritharr 11y ago
  Whats wrong with GMO Potatoes/Fries?
  - bluejellybean 11y ago
    There is a fear around anything GMO. Regardless of the actual health effects, it acts as a selling point in the same way 'organic' does.
  - dvh 11y ago
    Reason 1: 1. Company creates GMO. 2. Company visit farmers and make them offer. 3. Farmer don't want to buy for whatever reason. 4. Company buys land near farmer, plant GMO and wait for bees to transfer genes to farmer 5. Company sue farmer for copyright infringement. 6. Farmer cannot afford lawyers, went bankrupt. 7. Company offer to drop the case if farmer buys their GMO. 8. Farmer eventually lost the land, company buys it, plant their GMO. Reason 2: 1. Company want to improve plant, they have 2 choices: a) make it more resistant to pest b) make it more resistant to pesticide 2. Company chose b), then (allow farmers to) dump copious amount of pesticides on crop killing everything nearby. 3. Poisonous monoculture crop, bees are starving.
    - Roritharr 11y ago
      Reason 1 is a legal issue in the US, this is not something i've ever seen happening in Europe. Reason 2 sounds possible, but a bad decision of the Farmer. Once again not a thing i've heard happening in Europe, because it simply isn't cost efficient to do so. But what we certainly have is Organic Farmers having to resort to copious amounts of less effective but "organic" pesticides.
      - rdsnsca 11y ago
        Reason 1 also happens in Canada .
    - tedunangst 11y ago
      Never happened.
- DanBC 11y ago
  What's wrong with canola oil? Also, you're kind of missing the point that skinny fries without potato skin are low on the list of healthy ways to eat a potato.
  - narrator 11y ago
    Canola contains small amounts of eurcic acid, which is bad for heart health and 80% of it is gmo and thus treated with tons of glyphosphate before harvest. Glyphosphate is classified as a possible carcinogen by the world health organization. Gmo varieties are engineered to resist glyphosphate so the farmer can apply more of it.
    - ceejayoz 11y ago
      > Glyphosphate is classified as a possible carcinogen by the world health organization. So's coffee. Meanwhile, sunlight and estrogen are known carcinogens, but we don't hide in dark caves and cut out ovaries. http://en.wikipedia.org/wiki/Erucic_acid http://en.wikipedia.org/wiki/Erucic_acid indicates "the dietary intake of erucic acid by an individual consuming at the average level is well below the PTDI, therefore, there is no cause for concern in terms of public health and safety". This is the sort of scientific illiteracy that lets people like Food Babe scaremonger over what's in a pumpkin spice latte.
    - DanBC 11y ago
      GMOs are resistant to glyphosate so the farmer can apply less of it, but do so earlier in the crop cycle. Glyphosate got a 2A rating from the IARC. That's a rating that has importance for people working with the chemicals - it's an industrial exposure rating relevant to people who spray their crops. It has no relevance to you as a consumer of canola oil. The dose of glyphosate you'd get from canola oil is tiny. Do you have a credible source for your eurcic acid claim? Canola oil contains by definition less than 2% its total fatty acids as erucic acid. We think harm occurs in the 750 mg per kg range. (So an average adult weighing 60 kg needs to eat 45 gr of erucic acid per day, and erucic acid is just 2% of canola oil so you'd have to eat 2 kg of canola oil per day to get that much erucic acid) We adjust that down by a factor of one hundred just because, so a safe daily dose is 7.5 mg. that means a person has to eat 375 mg of canola oil per day to reach this dose which is a hundred times smaller than the smallest dose we see harm in animal experiments - and for this small dose you need to use infant pigs, otherwise the risky dose is higher. By European law the amount of erucic acid must be less than 5%. US FDA rules say that canola oil must be less than 2% Erucic acid.
- dmm 11y ago
  McDonalds doesn't sell GMO potatoes. http://www.idahostatesman.com/2014/11/15/3487642_mcdonalds-rejects-simplots-gmo.html http://www.idahostatesman.com/2014/11/15/3487642_mcdonalds-r...
- cowsandmilk 11y ago
  McDonalds Ingredients for a hamburger: Hamburger: 100% BEEF PATTY, REGULAR BUN, KETCHUP, MUSTARD, PICKLE SLICES, ONIONS That list seems pretty simple. I'm still not going to McDonald's to buy a hamburger. Maybe you object to what makes up the ketchup, mustard, etc? Source: http://nutrition.mcdonalds.com/usnutritionexchange/ingredientslist.pdf http://nutrition.mcdonalds.com/usnutritionexchange/ingredien...
  - deepvibrations 11y ago
    Err, yeah..but lets take the 'regular bun' for example- in that you have: Ingredients: Enriched Flour (Bleached Wheat Flour, Malted Barley Flour, Niacin, Reduced Iron, Thiamin Mononitrate, Riboflavin, Folic Acid), Water, High Fructose Corn Syrup and/or Sugar, Yeast, Soybean Oil and/or Canola Oil, Contains 2% or Less: Salt, Wheat Gluten, Calcium Sulfate, Calcium Carbonate, Ammonium Sulfate, Ammonium Chloride, Dough Conditioners (May Contain One or More of: Sodium Stearoyl Lactylate, DATEM, Ascorbic Acid, Azodicarbonamide, Mono and Diglycerides, Ethoxylated Monoglycerides, Monocalcium Phosphate, Enzymes, Guar Gum, Calcium Peroxide), Sorbic Acid (Preservative), Calcium Propionate and/or Sodium Propionate (Preservatives), Soy Lecithin, Sesame Seed. Looking at that, I think narrator has a good point!
    - kidsthesedays 11y ago
      Unless you make your bread from scratch this is what supermarket bread is like too.
      - rmxt 11y ago
        I don't mean to fear-monger, but at least I can read and mentally visualize all of the ingredients in some supermarket breads. See here: http://www.womenandweight.com/wp-content/uploads/2011/12/pepperidgefarm2.jpg http://www.womenandweight.com/wp-content/uploads/2011/12/pep... I don't know what any of these are: Ammonium Sulfate, Ammonium Chloride, Dough Conditioners (May Contain One or More of: Sodium Stearoyl Lactylate, DATEM, Ascorbic Acid, Azodicarbonamide, Mono and Diglycerides, Ethoxylated Monoglycerides, Monocalcium Phosphate, Enzymes, Guar Gum, Calcium Peroxide), Sorbic Acid (Preservative), Calcium Propionate and/or Sodium Propionate (Preservatives) Please note, I'm not trying to go all "dihydrogen monoxide" here, because I do know and understand that modern food, and as a result modern global health, processes rely on chemicals with names like the above ingredients. Also, maybe more viscerally, I'd wager that the McDonald's bun is one of those food items that has an unrefrigerated shelf life approaching infinity. (/s?). To think that something that even bacteria and molds won't be able to eat and break down is going to enter my body as sustenance...that's a little unsettling. At least with the supermarket bread I've posted, it probably won't last more than a week or two on the kitchen counter. In my uneducated opinion, that probably means that things like that won't linger around in my body too long to cause any lasting impacts, good or bad.
- mason240 11y ago
  >If they wanted to be revolutionary, they could go for certified non-gmo You meant anti-science, right?
paulpauper 11y ago
Everyone talks about McDonald's like they are doing something wrong, but as evidenced by the recent strong performance of the stock price, they are doing exactly what Wall St. expects, which is to provide mass-produced , uninteresting food to billions of consumers all over the world, which is a very profitable business and they have returned billions to shareholders in the form of a very high dividend. You cannot compare McDonald's with Chipotle or Shake Shack..it's a completely different business model and economy of scale. McDonald's is not dead, dying , or going away..they are just being McDonald's, that all.
- eitally 11y ago
  Actually McDonald's is not doing that. They're food sales has been suffering the last several years and the article is all about the other means they've been using to expand their market cap and "increase shareholder value". It's not dire straights, yet, but they have been losing market share consistently and this specific industry is constantly under threat from upstarts like the ones you mentioned.
  - stevenjohns 11y ago
    I can give my anecdotal position that this isn't the case in Australia. McDonald's is steadily increasing their prices and still completely dominating the fast food industry, more and more every year. At any time of the day there is at least a five to ten car queue at my local store, and they have effectively forced Hungry Jacks (Burger King) into -- more or less -- giving their food away for free.
    - bitwize 11y ago
      I noticed that about Japan as well, there was a line out the door for McDonald's when I was in Osaka a few years ago. Part of the difference is experience: your typical American major-city McDonald's is ill-maintained and staffed by unpleasant people, the food being terribad is just the icing on the shitcake and given how few fucks seem to be given about service quality or cleanliness, the chances it'll give you salmonella are probably much higher. Quite different from the magical wonderland where hamburgers grow on trees we were sold on by the 1980s television commercials. In Japan, cute 20-something girls take your order and serve your food with a little Handi-Wipe to clean up with after you're done. The restaurant is spotless and though a Japanese Big Mac tastes identical to an American Big Mac, you don't feel like it will give you food poisoning. From my limited experience with Australian McD's it's much the same and they turn into trendy little hangout spots.
tim333 11y ago
The authors argument seems a bit muddled: >The losers. A prime means of value extraction, stock buybacks snatch returns from workers and taxpayers who have contributed to the value-creation process. A company buying back stock does not really "snatch returns from workers and taxpayers." They use earnings to buy shares back. If they overpay then the people selling their shares gain, the remaining shareholders lose out and if they underpay visa versa. Workers and taxpayers are not directly effected.
- mauricemir 11y ago
  But with share buy backs the advisers make bank unlike dividends where its the owners that directly benefit
  - bobcostas55 11y ago
    Depends on the tax status of the owners, since dividends and cap gains are not treated in the same way.
    - mauricemir 11y ago
      But share buy backs are not a guaranteed gain and you don't have to spend millions to an IB to do the buy back. As someone said (back in the 20's) where are the investors yachts :-)
- cgearhart 11y ago
  As has been argued both on HN [1] and by McDonald's itself [2], fast food worker salaries can't be raised because it'll kill jobs since the money has to come from somewhere and the businesses can't afford it. But from the article: >"In 2014, McDonald’s expended $3.2 billion each on buybacks and dividends, equivalent to 134% of its net income... ...to help finance the plan, McDonald’s would...take on more debt...and find $300 million to cut in general and administrative expenses." I would say it's pretty clear there that workers are being directly affected, and previous studies of minimum wage [3] have shown that public assistance (including welfare and health benefits) act as a public subsidy of low wage workers. Stock buybacks are valuable to executives whose compensation packages are largely tied to stock, and short-term stock holders. It is less clear that they provide long-term value; especially when they're financed through aggressive value extraction as these appear to be. The money does have to come from somewhere -- and in this case it appears to be at the expense of long-term investment, squeezing the franchises & workers, and by taking on new debt. [1] https://news.ycombinator.com/item?id=9459625 https://news.ycombinator.com/item?id=9459625 [2] http://thinkprogress.org/economy/2013/08/22/2509161/mcdonalds-minimum-wage-kill-jobs/ http://thinkprogress.org/economy/2013/08/22/2509161/mcdonald... [3] http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/files/documents/WalMartReport-May2013.pdf http://democrats.edworkforce.house.gov/sites/democrats.edwor...
emodendroket 11y ago
Do they? I mean, let's say they changed absolutely nothing. They would not likely go out of business.
tdees40 11y ago
This is a deeply strange article. Why are stock buybacks manipulating? If there are 100 shares of a $1M company, each share is worth $10K. If I own 800 shares and you own 200, and the company has some cash lying around, maybe it will buy your shares. Now there are 800 shares outstanding, and if the company is still worth $1M, each share is now worth $12,500. Did I manipulate the share price? What's the point of calling it that, besides to make it sound nefarious, when it's just an everyday business practice?
- wcummings 11y ago
  >and the company has some cash lying around Does your opinion change if they're taking on debt / shrinking their business to buyback shares? >The company’s executives said that to help finance the plan, McDonald’s would increase refranchising (turning company-owned restaurants into franchises), take on more debt (even at the risk of lowering its bond rating), and find $300 million to cut in general and administrative expenses. It doesn't sound like its a case of McDonalds having a pile of cash
  - tdees40 11y ago
    Maybe let's put it a different way: if you and I are partners in a business, and I decide to take out a second mortgage and buy you out, is that a bad thing? What if I have to sell a slice of the business to pay off that mortgage? I dunno, this all seems reasonable, and if it's reasonable for one person, then I think it's reasonable for a corporation.
- justaman 11y ago
  By manipulating stock price they change the dividend play. I suppose they are attempting to instil the idea that they are not going anywhere in the minds of investors. IMO the issue McDonald's is facing is the degradation of its public image. Simply put, McDonald's is what homeless people eat(low in price, high in calories). In the last two or three decades new burger joints have emerged that fill the gap between the dollar menu burger and the $10 restaurant burger. Places like Culver's and In-and-Out have taken a larger slice of the _burger_. You can see them combating this with the aggressive advertising towards millennials; the trend-setters. The new non-GMO simple chicken sandwich is a glaringly obvious admittance that their prior adverts failed. To fix McDonald's, their only option is to use their superior distribution network to produce marginally higher quality food that is on par with the aforementioned. The perceived public image will improve itself overtime.

27 points by riqbal 11y ago

The best thing Mcdonalds could do is to simplify their ingredient lists such that anyone could read them and see that they were composed of boring obvious ingredients. For example, if their fries contained just potatoes, salt and some cooking oil that wasn't canola or cottonseed oil and they advertised it, I'd buy them again. If they wanted to be revolutionary, they could go for certified non-gmo. The world needs boring simple obvious cheap food. People are sick of all the questionable food additive innovation of the last few decades.

Roritharr 11y ago
Whats wrong with GMO Potatoes/Fries?
- bluejellybean 11y ago
  There is a fear around anything GMO. Regardless of the actual health effects, it acts as a selling point in the same way 'organic' does.
- dvh 11y ago
  Reason 1: 1. Company creates GMO. 2. Company visit farmers and make them offer. 3. Farmer don't want to buy for whatever reason. 4. Company buys land near farmer, plant GMO and wait for bees to transfer genes to farmer 5. Company sue farmer for copyright infringement. 6. Farmer cannot afford lawyers, went bankrupt. 7. Company offer to drop the case if farmer buys their GMO. 8. Farmer eventually lost the land, company buys it, plant their GMO. Reason 2: 1. Company want to improve plant, they have 2 choices: a) make it more resistant to pest b) make it more resistant to pesticide 2. Company chose b), then (allow farmers to) dump copious amount of pesticides on crop killing everything nearby. 3. Poisonous monoculture crop, bees are starving.
  - Roritharr 11y ago
    Reason 1 is a legal issue in the US, this is not something i've ever seen happening in Europe. Reason 2 sounds possible, but a bad decision of the Farmer. Once again not a thing i've heard happening in Europe, because it simply isn't cost efficient to do so. But what we certainly have is Organic Farmers having to resort to copious amounts of less effective but "organic" pesticides.
    - rdsnsca 11y ago
      Reason 1 also happens in Canada .
  - tedunangst 11y ago
    Never happened.
DanBC 11y ago
What's wrong with canola oil? Also, you're kind of missing the point that skinny fries without potato skin are low on the list of healthy ways to eat a potato.
- narrator 11y ago
  Canola contains small amounts of eurcic acid, which is bad for heart health and 80% of it is gmo and thus treated with tons of glyphosphate before harvest. Glyphosphate is classified as a possible carcinogen by the world health organization. Gmo varieties are engineered to resist glyphosphate so the farmer can apply more of it.
  - ceejayoz 11y ago
    > Glyphosphate is classified as a possible carcinogen by the world health organization. So's coffee. Meanwhile, sunlight and estrogen are known carcinogens, but we don't hide in dark caves and cut out ovaries. http://en.wikipedia.org/wiki/Erucic_acid http://en.wikipedia.org/wiki/Erucic_acid indicates "the dietary intake of erucic acid by an individual consuming at the average level is well below the PTDI, therefore, there is no cause for concern in terms of public health and safety". This is the sort of scientific illiteracy that lets people like Food Babe scaremonger over what's in a pumpkin spice latte.
  - DanBC 11y ago
    GMOs are resistant to glyphosate so the farmer can apply less of it, but do so earlier in the crop cycle. Glyphosate got a 2A rating from the IARC. That's a rating that has importance for people working with the chemicals - it's an industrial exposure rating relevant to people who spray their crops. It has no relevance to you as a consumer of canola oil. The dose of glyphosate you'd get from canola oil is tiny. Do you have a credible source for your eurcic acid claim? Canola oil contains by definition less than 2% its total fatty acids as erucic acid. We think harm occurs in the 750 mg per kg range. (So an average adult weighing 60 kg needs to eat 45 gr of erucic acid per day, and erucic acid is just 2% of canola oil so you'd have to eat 2 kg of canola oil per day to get that much erucic acid) We adjust that down by a factor of one hundred just because, so a safe daily dose is 7.5 mg. that means a person has to eat 375 mg of canola oil per day to reach this dose which is a hundred times smaller than the smallest dose we see harm in animal experiments - and for this small dose you need to use infant pigs, otherwise the risky dose is higher. By European law the amount of erucic acid must be less than 5%. US FDA rules say that canola oil must be less than 2% Erucic acid.
dmm 11y ago
McDonalds doesn't sell GMO potatoes. http://www.idahostatesman.com/2014/11/15/3487642_mcdonalds-rejects-simplots-gmo.html http://www.idahostatesman.com/2014/11/15/3487642_mcdonalds-r...
cowsandmilk 11y ago
McDonalds Ingredients for a hamburger: Hamburger: 100% BEEF PATTY, REGULAR BUN, KETCHUP, MUSTARD, PICKLE SLICES, ONIONS That list seems pretty simple. I'm still not going to McDonald's to buy a hamburger. Maybe you object to what makes up the ketchup, mustard, etc? Source: http://nutrition.mcdonalds.com/usnutritionexchange/ingredientslist.pdf http://nutrition.mcdonalds.com/usnutritionexchange/ingredien...
- deepvibrations 11y ago
  Err, yeah..but lets take the 'regular bun' for example- in that you have: Ingredients: Enriched Flour (Bleached Wheat Flour, Malted Barley Flour, Niacin, Reduced Iron, Thiamin Mononitrate, Riboflavin, Folic Acid), Water, High Fructose Corn Syrup and/or Sugar, Yeast, Soybean Oil and/or Canola Oil, Contains 2% or Less: Salt, Wheat Gluten, Calcium Sulfate, Calcium Carbonate, Ammonium Sulfate, Ammonium Chloride, Dough Conditioners (May Contain One or More of: Sodium Stearoyl Lactylate, DATEM, Ascorbic Acid, Azodicarbonamide, Mono and Diglycerides, Ethoxylated Monoglycerides, Monocalcium Phosphate, Enzymes, Guar Gum, Calcium Peroxide), Sorbic Acid (Preservative), Calcium Propionate and/or Sodium Propionate (Preservatives), Soy Lecithin, Sesame Seed. Looking at that, I think narrator has a good point!
  - kidsthesedays 11y ago
    Unless you make your bread from scratch this is what supermarket bread is like too.
    - rmxt 11y ago
      I don't mean to fear-monger, but at least I can read and mentally visualize all of the ingredients in some supermarket breads. See here: http://www.womenandweight.com/wp-content/uploads/2011/12/pepperidgefarm2.jpg http://www.womenandweight.com/wp-content/uploads/2011/12/pep... I don't know what any of these are: Ammonium Sulfate, Ammonium Chloride, Dough Conditioners (May Contain One or More of: Sodium Stearoyl Lactylate, DATEM, Ascorbic Acid, Azodicarbonamide, Mono and Diglycerides, Ethoxylated Monoglycerides, Monocalcium Phosphate, Enzymes, Guar Gum, Calcium Peroxide), Sorbic Acid (Preservative), Calcium Propionate and/or Sodium Propionate (Preservatives) Please note, I'm not trying to go all "dihydrogen monoxide" here, because I do know and understand that modern food, and as a result modern global health, processes rely on chemicals with names like the above ingredients. Also, maybe more viscerally, I'd wager that the McDonald's bun is one of those food items that has an unrefrigerated shelf life approaching infinity. (/s?). To think that something that even bacteria and molds won't be able to eat and break down is going to enter my body as sustenance...that's a little unsettling. At least with the supermarket bread I've posted, it probably won't last more than a week or two on the kitchen counter. In my uneducated opinion, that probably means that things like that won't linger around in my body too long to cause any lasting impacts, good or bad.
mason240 11y ago
>If they wanted to be revolutionary, they could go for certified non-gmo You meant anti-science, right?

paulpauper 11y ago

Everyone talks about McDonald's like they are doing something wrong, but as evidenced by the recent strong performance of the stock price, they are doing exactly what Wall St. expects, which is to provide mass-produced , uninteresting food to billions of consumers all over the world, which is a very profitable business and they have returned billions to shareholders in the form of a very high dividend. You cannot compare McDonald's with Chipotle or Shake Shack..it's a completely different business model and economy of scale. McDonald's is not dead, dying , or going away..they are just being McDonald's, that all.

eitally 11y ago
Actually McDonald's is not doing that. They're food sales has been suffering the last several years and the article is all about the other means they've been using to expand their market cap and "increase shareholder value". It's not dire straights, yet, but they have been losing market share consistently and this specific industry is constantly under threat from upstarts like the ones you mentioned.
- stevenjohns 11y ago
  I can give my anecdotal position that this isn't the case in Australia. McDonald's is steadily increasing their prices and still completely dominating the fast food industry, more and more every year. At any time of the day there is at least a five to ten car queue at my local store, and they have effectively forced Hungry Jacks (Burger King) into -- more or less -- giving their food away for free.
  - bitwize 11y ago
    I noticed that about Japan as well, there was a line out the door for McDonald's when I was in Osaka a few years ago. Part of the difference is experience: your typical American major-city McDonald's is ill-maintained and staffed by unpleasant people, the food being terribad is just the icing on the shitcake and given how few fucks seem to be given about service quality or cleanliness, the chances it'll give you salmonella are probably much higher. Quite different from the magical wonderland where hamburgers grow on trees we were sold on by the 1980s television commercials. In Japan, cute 20-something girls take your order and serve your food with a little Handi-Wipe to clean up with after you're done. The restaurant is spotless and though a Japanese Big Mac tastes identical to an American Big Mac, you don't feel like it will give you food poisoning. From my limited experience with Australian McD's it's much the same and they turn into trendy little hangout spots.

tim333 11y ago

The authors argument seems a bit muddled: >The losers. A prime means of value extraction, stock buybacks snatch returns from workers and taxpayers who have contributed to the value-creation process. A company buying back stock does not really "snatch returns from workers and taxpayers." They use earnings to buy shares back. If they overpay then the people selling their shares gain, the remaining shareholders lose out and if they underpay visa versa. Workers and taxpayers are not directly effected.

mauricemir 11y ago
But with share buy backs the advisers make bank unlike dividends where its the owners that directly benefit
- bobcostas55 11y ago
  Depends on the tax status of the owners, since dividends and cap gains are not treated in the same way.
  - mauricemir 11y ago
    But share buy backs are not a guaranteed gain and you don't have to spend millions to an IB to do the buy back. As someone said (back in the 20's) where are the investors yachts :-)
cgearhart 11y ago
As has been argued both on HN [1] and by McDonald's itself [2], fast food worker salaries can't be raised because it'll kill jobs since the money has to come from somewhere and the businesses can't afford it. But from the article: >"In 2014, McDonald’s expended $3.2 billion each on buybacks and dividends, equivalent to 134% of its net income... ...to help finance the plan, McDonald’s would...take on more debt...and find $300 million to cut in general and administrative expenses." I would say it's pretty clear there that workers are being directly affected, and previous studies of minimum wage [3] have shown that public assistance (including welfare and health benefits) act as a public subsidy of low wage workers. Stock buybacks are valuable to executives whose compensation packages are largely tied to stock, and short-term stock holders. It is less clear that they provide long-term value; especially when they're financed through aggressive value extraction as these appear to be. The money does have to come from somewhere -- and in this case it appears to be at the expense of long-term investment, squeezing the franchises & workers, and by taking on new debt. [1] https://news.ycombinator.com/item?id=9459625 https://news.ycombinator.com/item?id=9459625 [2] http://thinkprogress.org/economy/2013/08/22/2509161/mcdonalds-minimum-wage-kill-jobs/ http://thinkprogress.org/economy/2013/08/22/2509161/mcdonald... [3] http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/files/documents/WalMartReport-May2013.pdf http://democrats.edworkforce.house.gov/sites/democrats.edwor...

emodendroket 11y ago

Do they? I mean, let's say they changed absolutely nothing. They would not likely go out of business.

tdees40 11y ago

This is a deeply strange article. Why are stock buybacks manipulating? If there are 100 shares of a $1M company, each share is worth $10K. If I own 800 shares and you own 200, and the company has some cash lying around, maybe it will buy your shares. Now there are 800 shares outstanding, and if the company is still worth $1M, each share is now worth $12,500. Did I manipulate the share price? What's the point of calling it that, besides to make it sound nefarious, when it's just an everyday business practice?

wcummings 11y ago
>and the company has some cash lying around Does your opinion change if they're taking on debt / shrinking their business to buyback shares? >The company’s executives said that to help finance the plan, McDonald’s would increase refranchising (turning company-owned restaurants into franchises), take on more debt (even at the risk of lowering its bond rating), and find $300 million to cut in general and administrative expenses. It doesn't sound like its a case of McDonalds having a pile of cash
- tdees40 11y ago
  Maybe let's put it a different way: if you and I are partners in a business, and I decide to take out a second mortgage and buy you out, is that a bad thing? What if I have to sell a slice of the business to pay off that mortgage? I dunno, this all seems reasonable, and if it's reasonable for one person, then I think it's reasonable for a corporation.
justaman 11y ago
By manipulating stock price they change the dividend play. I suppose they are attempting to instil the idea that they are not going anywhere in the minds of investors. IMO the issue McDonald's is facing is the degradation of its public image. Simply put, McDonald's is what homeless people eat(low in price, high in calories). In the last two or three decades new burger joints have emerged that fill the gap between the dollar menu burger and the $10 restaurant burger. Places like Culver's and In-and-Out have taken a larger slice of the _burger_. You can see them combating this with the aggressive advertising towards millennials; the trend-setters. The new non-GMO simple chicken sandwich is a glaringly obvious admittance that their prior adverts failed. To fix McDonald's, their only option is to use their superior distribution network to produce marginally higher quality food that is on par with the aforementioned. The perceived public image will improve itself overtime.