McDonald’s 0.1% Revenue Decline in July Due to More Rivals; Special Report by Leading Financial e-Letter Investment Contrarians

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In a recent Investment Contrarians article, editor George Leong reports that McDonald’s, a fast food bellwether, reported a 0.1% decline in July in its key same-store revenues for stores opened at least 13 months. (Source: McDonald’s Corporation, http://phx.corporate-ir.net/phoenix.zhtml?c=97876&p=irol-newsArticle&ID=1723680&highlight=). This was the first decline in years, Leong notes, and fell well below the 9.6% December reading. Leong argues the current stalling in revenues has been impacted by a growing list of rivals, aiming to emulate McDonald’s to take its market share; McDonald’s is in for a fight, he states.

McDonald’s 0.1% Revenue Decline in July Due to More Rivals; Special Report by Leading Financial e-Letter Investment Contrarians

McDonald’s 0.1% Revenue Decline in July Due to More Rivals; Special Report by Leading Financial e-Letter Investment Contrarians

Leong points out that McDonald’s has been a top performer in the restaurant sector after the company made a dramatic shift in its menu, offering to include healthy meals and broadening its target market.

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In a recent Investment Contrarians article, editor George Leong reports that McDonald’s, a fast food bellwether, reported a 0.1% decline in July in its key same-store revenues for stores opened at least 13 months. (Source: McDonald’s Corporation, http://phx.corporate-ir.net/phoenix.zhtml?c=97876&p=irol-newsArticle&ID=1723680&highlight=). This was the first decline in years, Leong notes, and fell well below the 9.6% December reading. Leong argues the current stalling in revenues has been impacted by a growing list of rivals, aiming to emulate McDonald’s to take its market share; McDonald’s is in for a fight, he states.

Leong points out that McDonald’s has been a top performer in the restaurant sector after the company made a dramatic shift in its menu, offering to include healthy meals and broadening its target market. According to Leong, this strategy worked, as McDonald’s is at the top of the fast-food chain at this juncture, leaving Burger King and Wendy’s behind.

Leong reports that in the key and growing China fast-food market, McDonald’s operates about 1,500 stores (aiming for 2,000 by 2013); however, he notes, the company faces tough competition from YUM!, the operator of such well-known fast-food outlets as Taco Bell, Kentucky Fried Chicken (KFC), and Pizza Hut.

With close to 4,500 restaurants spread across more than 700 cities in China, YUM! generated $908 million in operating profits from its Chinese outlets in 2011, reports the Investment Contrarians editor. (Sources: YUM! web site, http://www.yum.com/brands/china.asp; http://www.yum.com/investors/income_statement.asp)

Leong cites the company’s web site, stating, “We consider China to be the greatest restaurant opportunity of the 21st century.” At present, the company reports that about 40.0% of its profits are generated in China. (Source: YUM! web site, http://www.yum.com/brands/china.asp)

However, Leong also argues, “McDonald’s needs to be concerned with the strategy of Burger King, which announced it would open up 1,000 restaurants in China within five years.”

With the competition increasing, Leong suggests it looks like the next major fast-food battleground will be in China, and McDonald’s needs to be prepared.

To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.

Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.

After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.

Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.

Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.

George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.

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