Because of its past successes, the bar is set high for McDonald's, which can overly magnify the significance of small dips in performance. All in all, the fast-food giant is still doing pretty well, particularly in the Middle East and Africa. The fact that Ramadan fell during August this year may have provided a boost in these largely Islamic parts of the world, considering that McDonald's is a quick, cheap, and filling meal after daily fastings.
Europe's economic slowdown will surely affect McDonald's bottom line, since 40% of revenue originates from that region. However, it's not yet clear exactly how the economy will affect sales, and it shouldn't be assumed that the impact will necessarily be a negative one. After all, when money's tight, McDonald's is a value provider of low-cost meals.
McDonald's franchise model would be a poor choice for many popular fast-food providers, but it makes a lot of sense as long as it's within the company's means. McDonald's is a truly global establishment, with about 20% of locations company-owned; this allows for country- and culture-specific tailoring that is a huge contributor to the brand's worldwide success. Shares are down at the moment, but McDonald's is still the force to be reckoned with in fast food.
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Chris Hill, Jason Moser, and Joe Magyer have no positions in the stocks mentioned above. The Motley Fool owns shares of Chipotle Mexican Grill and McDonald's. Motley Fool newsletter services recommend Chipotle Mexican Grill and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.