Pizza slinger Sbarro just filed for bankruptcy, but a slim silver lining awaits any of its employees dreading a pink slip. On the opposite end of the fast-food success spectrum, McDonald's (NYSE: MCD ) is gearing up for a massive one-day hiring push. (Sbarro servers, get those resumes ready.)
McDonald's vows to hire 50,000 people on April 19, both for regular restaurant staff positions and restaurant management gigs. According to the fast food giant, it will pay out $518 million extra to workers this year; these workers will provide $54 million in much-needed payroll tax to help the overall economic outlook; and the new hires will ring up nearly $1.4 billion in annual spending.
Hiring sprees from any huge company make for welcome news right now. U.S. unemployment remains dreadfully high at 8.8%, and many Americans still sorely need work. McDonald's has proved itself recession resistant as its low-priced offerings continue to bring robust customer traffic through the Golden Arches.
On the other hand, Sbarro's recent bankruptcy filing reveals the fate awaiting consumer-facing companies that fall to the back of the competitive pack. The company blamed its dire straits on a "decline in mall traffic" and its "unsustainable balance sheet." Fellow well-known names Harry & David, Borders, and Blockbuster have also recently sunk into Chapter 11, unable to keep pace with their rivals in this harsh economic atmosphere.
Consumer-driven retail still harbors plenty of weak contenders just waiting to be weeded out. Grocer SUPERVALU (NYSE: SVU ) has endured two consecutive years' worth of dwindling revenue, and it sports an uncomfortably high debt-to-capital ratio of 85.9%.
Even Wal-Mart (NYSE: WMT ) , which should have been a shoo-in to succeed in tough times, has struggled to bolster traffic as its core customers curtail their spending. I think the Bentonville Behemoth might be losing its competitive advantage.
The overall market has been on fire, floating strong and weak stocks alike. But despite Wall Street's inordinate bullishness, investors should be more discriminating than ever, choosing only those companies with the sharpest management and strongest competitive positions for their portfolios. McDonald's may be enough of a winner to inject much-needed jobs into a difficult marketplace, but unfortunately, it's the exception, not the rule.