Unhappy Meal: McDonald's Serves Up Big Charge With Its Loss

Cantalupo added that given the size of McDonald's, "a 10% to 15% earnings-per-share growth target is not realistic." He said the company would seek "reasonable growth" that creates "shareholder value."

For years, McDonald's has kept a 10% to 15% growth goal, despite recently falling well short of those levels. "They haven't been growing anywhere near there," said Hickok. "At least they're no longer in denial."

Other analysts applauded the move. "It is a positive to see that McDonald's has scrapped plans calling for 10% to 15% growth annually," said Mark Kalinowski, an analyst at Salomon Smith Barney, in a research note. "We are happy to see management is taking a more realistic look at earnings potential."

Kalinowski trimmed his long-term growth forecast for McDonald's to 7% from 10%. He has an underperform rating on the stock. Salomon Smith Barney has a banking relationship with the company.

Analysts have roundly criticized the company's perception of itself as a growth business. "Perhaps they are moving toward the realization that they cannot grow as much anymore," said Hickok.

On the company's earnings conference call, Cantalupo said, in reference to a question last week about how he views the company, that McDonald's is not a "cash cow." But he said it is not a "gazelle" either.

"We are somewhere in the middle," Cantalupo said. The CEO added that he aims to build growth by improving sales at existing restaurants and by prudently adding new restaurants. McDonald's plans to open 1,230 new stores this year, slightly fewer than last year. It also plans to remodel 200 restaurants.

Cantalupo plans to take a "hard look" at reducing the company's capital spending budget, which is estimated at $1.9 billion for 2003. "We will only invest capital where it makes good sense," he said. The company's plans would reduce investments in Asia and Latin America, where economies are weak.

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