McDonald's restaurants, with its colorful cast of promotional characters like Ronald McDonald, fast service and reasonable prices, are a favorite of families and children. The company’s success makes it just as popular with investors. For the small investor, McDonalds offers a direct stock purchase program with low minimum investments and transaction costs. This article reviews McDonald’s status and history and describes McDonald’s direct stock purchase program.
McDonald's Corporation is one of the largest food service companies in the world. The company’s restaurants, with the familiar golden arches, are the central business activity. Approximately 75% of the units are franchises and operate in over 100 countries. At one time McDonald's had acquired several other restaurant chains, including Boston Market, but since 2000 sold off several of them. As o f1985 McDonald's was added to the Dow Jones list of 30 Industrials. It is a NYSE listed stock with the ticker symbol MCD.
McDonald's is headquartered in Oak Brook, Illinois and operates 31,000 restaurants worldwide, employing 390,000 people as of 2008. Total revenue for 2007 from company owned stores and revenue from franchises was $22.8 billion. Operating income was $3.88 billion with net income of $2.36 billion. The company listed 29.4 billion in assets with equity of $15.3 billion.
The McDonald's concept of a franchised fast food restaurant goes back to the original store started in 1940 in San Bernardino, California, by Dick and Mac McDonald. In 1954 Ray Kroc, a distributor of Multimixer milkshake machines, saw the store was doing a remarkable volume and persuaded the McDonald brothers to allow him to use the concept. The McDonald's of today dates from the 1955 opening of Kroc’s first store in Des Plaines, Illinois. McDonald's went public in 1965. In subsequent decades the company has expanded into a world wide restaurant operation, maintaining its strategy of focusing on two target markets: busy workers needing fast service in the day and the family and children’s market. By the 1990s McDonald's had moved from a primarily focus on free-standing stores to a growing presence in shopping malls and office buildings.
The McDonald’s direct stock purchase program is called McDirect Shares. The plan is administered through Computershare, which acts as McDonald’s plan administrator. The initial investment requirement is $500, but this can be waived by committing to ongoing automatic debit investments of at least $50 per month. There is a one time start-up fee of $5.00 (waived if you already own at least 10 shares). There is a $1 fee per transaction, regardless of size, if these are made through automatic debit from your bank account. Paying by check is allowed, but the fee is $3 per transaction. Dividends are automatically reinvested without added fees. The transaction fee for a sale of stock is $15 plus 15 cents per share. You can get a copy of the McDirect Shares prospectus either online or by contacting McDonald's Corporation Shareholder Services.
McDirect Shares has several options of interest. The plan is open to employees of McDonald’s system. In addition, a minor can invest with a minimum of just $100 or a $50 automatic debit monthly. You can set up the your account as an Individual Retirement Account. This option does carry with it additional custodial fees that are separate from the transaction fees. If you are considering this or any other direct stock purchase plan, be sure to research the company by getting a copy of the annual report and other financial documents and checking out what independent financial analysts say about the company’s status and future prospects.