McDonald's burgers rank worst in survey

Consumer Reports scores MCD last out of 18 restaurants. Should the company be worried? And who ranks No. 1?

By InvestorPlace Sep 8, 2010 12:20PM

Big Mac © McDonald’sBy Burke Speaker, InvestorPlace

 

McDonald’s (MCD) may be the No. 1 burger brand in the world, but it also has the dubious honor of having the worst-tasting burger in a new Consumer Reports ranking. 

The poll of 28,000 online subscribers to the independent consumer advocacy magazine asked respondents to rate the burgers they had eaten on their most recent restaurant visits.


So who won the survey?

Five Guys Burgers and Fries came in first, followed by In-N-Out Burger. Fuddruckers, Burgerville and Back Yard Burgers were also high on the list. Asked to rate the burgers on a scale of 1 to 10, respondents rated McDonald's No. 18 of 18 fast-food restaurants, with a ranking of 5.6.

But clearly, some people must think the burgers are good. A McDonald's spokesman said the company is selling more burgers than ever and that all of its burgers have retained their popularity.

 

 Post continues after video:

For a company whose stock is at an all-time high -- with a new 52-week high set again today -- deals and menu items obviously are keeping customers coming back. And despite its low marks, McDonald's is retaining its strong earnings with rock-bottom prices aimed at consumers in an economic crunch.

 

MCD's 52-week high is its peak in the company's entire history. In 2002 its shares were priced at $13, and now MCD is up 35% over just the past year, trouncing competitors and the broader stock market. And it's up 21.39% compared with the 0.8% drop for the Dow and 2% decline for the S&P 500.

 

While maybe not enjoying the burgers, investors are clearly enjoying MCD's results. Diluted earnings per share were $1.13, up 15% in its second-quarter earnings report. And global sales were up 4.8% across the board. U.S. sales notched up 3.7%, Europe jumped 5.2%, and Asia/Pacific, Middle East and Africa leapt 4.6%.

The company returned $1.6 billion to shareholders through share repurchases and dividends. (MCD also pays a dividend of $2.20, which is a yield of more than 3%.)


With more than 14,000 restaurants from coast to coast, the company is also giving consumers what they want in a poor economy -- with big returns. With 25% of sales from its ever-expanding breakfast menu, huge returns on its Starbucks-rivaling McCafe, and a Dollar Menu that is seeing even more success during a recession, it's no wonder the company is soaring.

 

So while it can't boast having the best burgers, as long as consumers keep ordering other items on Micky D menus, the returns will keep rolling in. But you may want to get the chicken sandwich next time.


As of this writing, Burke Speaker did not own a position in any of the stocks named here.


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