This kind of blanket statement is almost always wrong about anything in the messy real world.
But it's especially wrong in this case. McDonald's is effectively a real estate company[0] that has been growing over ~80 years.
[0] https://thestrategystory.com/2020/09/24/mcdonalds-real-estat...
I don't think this contradicts the contention that McDonald's is too short-term in its thinking to be worried about resale value.
Yes, they're a real estate company. But most of that real estate is never sold or rented to anyone other than McDonald's franchisees.
I think they designed the stores this way because they believe -- and probably have troves of data to support them -- that this style of architecture is better for their restaurants too.
It's not credible that a corporation that grows from one restaurant into world dominance is guilty of "short-term" thinking.
Short term thinking leads to a crashing stock value, followed by bankruptcy.
Investors don't want that.
If I do something today, and the corporation benefits in 10 years, I don't get the credit for that. Whoever has my role in 10 years gets the credit.
I completely agree that corporations SHOULD think long-term. But I fail to see much evidence of that.
If you want to argue that Ray Kroc had a long-term vision, you'd probably be right. But I very much doubt today's management thinks that far out.
Every large company on the stock exchange is evidence of that.
> are you really arguing corporations aren't driven by quarterly and annual results?
Have you ever seen companies beat their quarterly earnings estimates, and yet their stock drops? That's because the shareholders were suspicious that those results were short term, and the long term outlook didn't look so hot.
Any shareholder that is suspicious that a corporation has sacrificed the long term for short term profits, is going to dump that stock. Wouldn't you?
Dividends are not a sign of short term investing. When the company's profits decline from short term thinking, the dividends disappear.
BTW, if you identify a company that is short-terming, and the other investors haven't caught on and tanked the stock, you can make a mint by shorting the stock. Got any success stories at that? Have you made money shorting McDonald's?
This is a commonly repeated trope that is just wrong. Corporations are very forward looking. Consider the price earnings ratio of the S&P500. It's been on a general upward trend since the 80s, only disrupted by recessions and stock market crashes [0]. That means stock holders are willing to invest more money for future earnings. Discount rates are also very low historically which means future earnings are discounted at a lower rate.
Similarly the number of companies that earn no profit is very high:
> Of the largest 1,500 companies by market capitalization today, around 200 weren’t profitable during any of the last three years. But instead of punishing them, investors have rewarded them with a total market value of more than $2.3 trillion. Wall Street hasn’t been willing to attach such high market values to unprofitable companies since the late 1990s (and even then, the total market valuation of the unprofitable companies wasn’t even half of what it is now). [1]
Private R&D spending is also on an upward trend since the 50s as a percentage of GDP, displacing much of federal spending in R&D. [2]
Everywhere you look you'll see long term thinking is rewarded. The only place you hear complaints about "short term profit" is corporate managers that want cover for bad results. They can always say they're "investing for the future" and their investments will take a decade to pan out, but conveniently they won't be around by then.
I doubt you can find any Excel valuation template that's used in business school that does not include resale value. You can bet the people in charge of purchasing McDonald's real estate look very closely at resale value.
[0] https://en.wikipedia.org/wiki/Cyclically_adjusted_price-to-e...
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[1] https://money.com/stock-market-companies-no-profits/
[2] https://cglife.com/blog/recent-trends-in-rd-spending-the-lan...
Please stop posting this. It only makes Marx's falling rate of profit[1] look correct.
1. https://en.m.wikipedia.org/wiki/Tendency_of_the_rate_of_prof...
What exactly are we supposed to be gaining by burying our heads in the sand and refusing to talk about high-valuation unprofitable companies?
You could say, 'Ive always thought' or 'I have evidence that demonstrates that your point isn't totally correct' or something that respects the original poster a bit more than outward dismissal.
It's not even a long-term vs short-term thing.
The boring building increases your capitalization as a holding more, allowing you to financialize it more.
The breakfast menu has been cancelled here though since Corona and never returned :'( I miss my sausage and egg muffin.
In America, Covid killed the "all day breakfast," which is a shame. Sausage and egg muffin is better than all their lunch/dinner food.
So now it's the regular menu all day. Big mac for breakfast? Hmmm. No.
In fact I've never seen all-day breakfast at any McDonald's in Europe and I've traveled a lot for work (so a lot of hit & run breakfasts at airports)
I always wondered how they get the eggs so round but one time I saw them make them.. They fry the egg on the burger plate but in a metal ring. Cool idea.
That said, the article is good at highlighting a huge cultural trend. Resale value might be only partially a driver of it. A lot of my monochromatic purchases will never be resold to anyone.