Fast food giant McDonald’s Corp (NYSE: MCD) has been one of the largest restaurants in the world by unit count and annual revenue for many years. The company leads the industry with a franchise model, a strong selection of locations, new products and fan favorites.
A menu promotion launched in 2002 has been a staple in restaurants in one form or another and could have been a good entry point for investors as well.
What happened: McDonald’s began experimenting with price promotions for its menu in 1991. After several tests, McDonald’s opted for a dollar menu with select items offered at a price of $ 1.
On November 27, 2002, McDonald’s spear its first meal of national value with the introduction of the “dollar menu”.
Items like the double cheeseburger, the toast flatbread sandwich, and a meal of chicken nuggets were among the first items on the dollar menu.
Franchisees love increased sales but disliked the lower profit margins on some of the top selling items. Store owners were able to change the prices of the items, with some stores changing the price of the double cheeseburger to $ 1.39 at the time.
McDonald’s has revamped its menu prices and promotional menu items over the years, but some form of dollar menu has generally remained available in restaurants. After a five-year hiatus, the company added a dollar menu in 2017 that included soft drinks, cheeseburgers, McChickens and sausage burritos for $ 1 and several $ 2 and $ 3 items.
Having a valuable menu section helped the company increase sales during the year, which also made restaurant stock a high performing product.
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Invest $ 1,000 in MCD: Investors who recognized that a national dollar menu launch could help boost sales at McDonald’s restaurants have been pleasantly rewarded with strong annual returns from restaurant stock.
McDonald’s shares traded at a high of $ 18.64 on November 27, 2002. A $ 1,000 investment in the stock could have bought 53.65 shares.
The 53.65 shares would be worth $ 14,415.75 at the time of writing, based on a price of $ 268.75 for MCD shares.
The $ 1,000 investment would have yielded a gain of +1 341.6% over the 19-year period, excluding dividends. The yield comes out at an average annual yield of 70.6%.
Photo: Kelvin Stuttard from Pixabay
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