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McDonald’s Rising

The first months of 2003 were the worst period in the entire 52 year history of McDonald’s. In the fourth quarter of 2002, the company reported its first-ever quarterly loss. The company’s stock price hit a low of $12 a share in mid-March of 2003. Its CEO, Jack Greenberg, was fired by the board at the end of 2002. Operations were suffering and franchisees were losing money. At the time, Business Week called it “hamburger hell.”

Four years later, McDonald’s is prospering again. Its sales have grown 40% from the end of 2002 to the end of 2006. The company has quadrupled its dividend over the past five years, and its net income has quadrupled as well, to $3.5 billion in 2006. Its US market share is now three times that of its nearest competitors, Wendy’s and Burger King. This stellar performance has been reflected in its stock, which now trades at around $45.