Some fast-food chains experiment with menu items. McDonald's
The news didn't have much impact on its stock in morning trading -- probably a sensible reaction. Moves like these are exactly what a company like McDonald's should be doing: Experimenting with various ways to get some incremental growth with new concepts, then dropping them if they don't deliver. (The pizza business certainly has been tough enough lately without McDonald's trying to put a spin on it.) Put another way, this should be business as usual.
More than anything, this should provide more fuel for those who are behind McDonald's CEO Jim Cantalupo. (One such fan is Fool contributor Whitney Tilson, who said so in his subtly titled CEO of the Year column back in October.) Cantalupo took over a company many said had grown stale both domestically and overseas, but his focus on doing "fewer things better" has quickly taken root and shown results.
McDonald's will pay for its decisions: It expects fourth-quarter charges of between $0.23 and $0.28 per share as a result of these (and select other) moves.
The short-term price, however, is well worth it for investors who have accepted the notion that McDonald's, while perhaps still full of ideas, is now picking its battles more carefully. The mantra: Manage costs, improve store-level performance and operations in key markets, pay that dividend, and keep the cash flow coming. Incremental growth from chains such as Boston Market and Chipotle should be a bonus.
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Dave Marino-Nachison can be reached at email@example.com.