Daniel Gross: Who Won the Recession? McDonald's.
Now that the recession is most likely over, it's time to start looking at which companies, institutions, and individuals thrived during this grim period. In the harsh downturn that began in December 2007, success was redefined—flat became the new up, and muddling through became a triumph. In a recession that hit all rungs of the income ladder and ravaged the wealthiest consumer markets—the United States, Europe, Japan—there were very few safe havens. But some countries, such as Peru, managed to grow right through the global recession. And some companies arranged their business so that they resisted the contraction and benefited from trends affecting their industry. Some even managed to make decisions during the trough that brought in more business.
Chief among the Great Recession's winners is McDonald's. McDonald's sales growth in 2008 was greater than in 2006 and 2007. While many restaurants scaled back, it opened nearly 600 stores in 2008. And the chain has notched same-store-sales growth in each of 2009's first seven months.
In late 2007, an age of trading up, spreading food-snobbery, and rising health-consciousness, it was easy to write off the Golden Arches. Greasy, downscale, industrialized, aggressively unhealthy, McDonald's was a ripe target for popular-culture agitators, such as Eric Schlosser (Fast Food Nation) and Morgan Spurlock (Supersize Me). One couldn't imagine Barack Obama stopping in for coffee and a Quarter Pounder, the way Bill Clinton used to after a jog. And yet, McDonald's has done quite well in a very difficult period for large corporations. Over the last three years, its stock has handily outperformed the S&P 500, and the company's investor-relations site proclaims that it is "firing on all cylinders." McDonald's success can be chalked up to a combination of luck—which is the residue of smart planning—and savvy moves.
In 2008, after a decade of relentlessly trading up to higher quality (read: more expensive) consumer goods and services, Americans began to trade down with a vengeance. McDonald's, which has 44 percent of its 32,000 stores in the United States, was set up to profit from trading down in two ways. First, in a recession, people eat out less and at home more frequently. And when they eat out, they eat at cheaper places. McDonald's is so cheap, efficient, pervasive, and convenient that it was a viable alternative to casual restaurants like Ruby Tuesday and to cooking at home. As this stock chart shows, investors, like diners, angled toward McDonald's and away from Ruby Tuesday during the recession...
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Chief among the Great Recession's winners is McDonald's. McDonald's sales growth in 2008 was greater than in 2006 and 2007. While many restaurants scaled back, it opened nearly 600 stores in 2008. And the chain has notched same-store-sales growth in each of 2009's first seven months.
In late 2007, an age of trading up, spreading food-snobbery, and rising health-consciousness, it was easy to write off the Golden Arches. Greasy, downscale, industrialized, aggressively unhealthy, McDonald's was a ripe target for popular-culture agitators, such as Eric Schlosser (Fast Food Nation) and Morgan Spurlock (Supersize Me). One couldn't imagine Barack Obama stopping in for coffee and a Quarter Pounder, the way Bill Clinton used to after a jog. And yet, McDonald's has done quite well in a very difficult period for large corporations. Over the last three years, its stock has handily outperformed the S&P 500, and the company's investor-relations site proclaims that it is "firing on all cylinders." McDonald's success can be chalked up to a combination of luck—which is the residue of smart planning—and savvy moves.
In 2008, after a decade of relentlessly trading up to higher quality (read: more expensive) consumer goods and services, Americans began to trade down with a vengeance. McDonald's, which has 44 percent of its 32,000 stores in the United States, was set up to profit from trading down in two ways. First, in a recession, people eat out less and at home more frequently. And when they eat out, they eat at cheaper places. McDonald's is so cheap, efficient, pervasive, and convenient that it was a viable alternative to casual restaurants like Ruby Tuesday and to cooking at home. As this stock chart shows, investors, like diners, angled toward McDonald's and away from Ruby Tuesday during the recession...