McDonald's (NYSE:MCD) Golden Arches don't seem even a bit tarnished these days. Its profits came in pretty much as expected -- another meaty quarter for the burger giant, with some interesting new developments.

First-quarter profit increased 22% at McDonald's, and revenue increased 11% (7% in constant currencies). Income from continuing operations increased 33%. In March, McDonald's managed its 48th consecutive month of positive same-restaurant sales in the U.S., an impressive run indeed. McDonald's said in the footnotes that U.S. sales were primarily driven by its breakfast business and the ongoing appeal of new products like the Snack Wrap. (As per usual, McDonald's did not include a balance sheet or cash flow statement in its press release, although its 8-K on www.sec.gov includes some supplemental data that's useful.) Its earnings of $0.62 per share were on par with analysts' estimates.

The quarter wasn't much of a surprise, but McDonald's also announced that it will franchise 1,600 restaurants in Latin America and the Caribbean. It will receive $700 million in proceeds from the move, but bear in mind it will also record a $1.6 billion charge in the current quarter. The company said this will benefit shareholders by reducing volatility and help focus management's attention on the markets with the greatest impact on results. The company said it will use the proceeds to increase its dividends and share repurchases to $5.7 billion in 2007 and 2008.

The franchising news jogged my memory -- I couldn't help but recall that in 2005, activist shareholder Pershing Capital (the same one that moved for Wendy's (NYSE:WEN) spin-off of Tim Hortons (NYSE:THI)) was pressuring McDonald's to do some interesting financial engineering by spinning off company-owned stores and profiting off real estate and franchising. Although McDonald's decided to continue with its own plan (of course, it certainly seemed to get a little of the fear of God, sweetening the deal for shareholders by paying out billions in dividends and share repurchases, not to mention spinning off Chipotle Mexican Grill (NYSE:CMG)), it's interesting to see this move, through which it stands to gain royalty fees from franchisees in Latin America while skipping the capital expenditures. If you read this educational 2005 commentary by Bill Mann, you'll get the logic behind the concept, as much as some of us might have a hard time turning loose of the idea that McDonald's has a hand in its hamburgers. Then again, although the 1,600 restaurants may sound like a drop in the bucket, McDonald's has been planning to reduce the number of company-operated restaurants it has in its portfolio by refranchising them or entering into licensing agreements, and with only about 8,000 of its 31,000 restaurants company-owned, this latest makes an interesting aside.

Anyway, suffice it to say that McDonald's good times didn't look like a foregone conclusion several years ago. Its turnaround has most certainly been a success, making rivals like Burger King (NYSE:BKC) and Wendy's look kind of weak by comparison. Given the way McDonald's management has addressed many challenges over the last several years and executed so very well, I still have to say things still look solid for this fast-food giant.

There's more McDonald's on the menu:

Chipotle Mexican Grill has been recommended by Motley Fool Rule Breakers and Motley Fool Hidden Gems.  

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.