How McDonald's Has Become Such A Market Force

By Xavier Brenner

McDonald’s (MCD) is such a steady performer year in and year out that it’s easy to take the company for granted. Yet the fast food giant definitely deserves its bluest of blue chip status. It’s a cash-generating machine that has returned billions to investors over the years via stock buybacks and steady dividends.

McDonald’s stock, up about 9% on the year through June 20, has lagged the broader market and many of its fast food peers this year. But it’s hard to argue with its long-term track record (see below) or future prospects.

MCD Chart

MCD data by YCharts

Even consumers who love fine dining appreciate what McDonald's has to offer. Chaitali Waychal, a self-described chef and insatiable gourmand, recently responded to the following  question on Quora: Why do people eat at McDonald’s?

Here’s his response:

I love McDonald's. I am a trained chef and a self-confessed food snob. Despite my education in one of the finest cooking schools in Paris and training in classical Michelin starred restaurants, I couldn't be happier chowing down a Big Mac meal with large fries.

And I'm definitely not alone. The kitchen crew, in one of the restaurants I worked at, would serve beautifully executed gastronomic meals to gourmets shelling out around 1000Euros  ($1350) for a dinner for two. After service, we would all traipse down to the nearest 'McDo' and have a late night snack while dissecting the extravagant menu we had just served up.

Here's why I think why millions of people frequent McDonald's while being fully aware of it's well-documented health and environmental hazards.

Comfort: It's comforting due to the fact that it's consistent in  quality. A BigMac or an order of chicken nuggets will taste similar in almost every McD in the world. When you just arrive in a new place and haven't had time to scope out the food scene, the options are usually a seedy local bistro which might try to pass off dishwater for French onion soup, (and charge you 20 bucks for it) or a cheap, tried and tested McDonald's. It's a lot more comforting to choose something familiar then try something scary and foreign.

Hours: McDonald's is open late, sometimes even 24H and generally on weekends. I cannot stress how incredibly convenient it is to have a place that serves hot food when everything else is closed. I found this to be especially in European countries where restaurants/general stores/cafes normally shut down on weekends.

Taste: Golden fried nuggets dunked in delicious BBQ sauce. Crispy fries showered liberally with salt and served piping hot; Deliciously sweet, effervescent Coke poured over ice cubes. Not only do they sound good, but taste good too! McDonald's very cleverly caters to the basic stimulants of Salt/Fat/Sugar. Once you start eating it, you become addicted to the heady combination.

Service: Say what you will, but McD has pretty good service. It may not always be friendly, but it's always rapid and efficient. And in some locations, you can simply order a burger off the dollar menu and mooch off the free WiFi for however long you wish.

Regarding the stock, consider the following:

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