More than 90 million American travelers will make Christmas Day journeys in excess of 50 miles this year. Forget Grandma's house, many of those travelers will end up at the Golden Arches (MCD).
According to an internal memo obtained by Advertising Age, McDonald's wants its franchisees to open on Christmas Day.
Why? McDonald's November results surprised analysts with an unexpected increase in November sales of 2.5% after a drop in October of 2.2% for stores opened at least 13 months. Analysts pointed to Cheddar Bacon Onion sandwiches and the $4.99 Chicken McNugget 20-piece. One overlooked reason for the increase however, could have been the increased availability of Happy Meals on Thanksgiving Day.
Now I'm not an analyst, nor do I play one on TV, but I am a Dad who travelled over 250 miles on Thanksgiving Day this year and was pleasantly surprised to find several McDonald's open. And I stopped at two different stores both going and coming, if only to use the restroom. My family however, couldn't help but spend some money at the McCafe'. And apparently others did as well. According to the Advertising Age article, McDonald's USA Chief Operating Officer Jim Johannesen wrote in a December 12th memo, "Our November results were driven, in part, by our Thanksgiving Day performance." Johannesen went on to say that average sales for company owned restaurants averaged more than $6,000.00 on Thanksgiving Day. Now that may not seem like a lot, and in the big scheme of things it isn't, but considering how many McDonald's there are and how many likely will follow the company request and open on Christmas Day as well, the sales addition to the bottom line may not be inconsequential. Some estimating as much as $72 million in additional sales could be added to the fourth quarter. Just for being open two extra days, Thanksgiving and Christmas.
After seeing a drop in global revenue in October, the first since 2003, these November results and the actions that management has taken to reverse the drop could bode well for the future. Bouncing off its 52-week low in Mid-November and with a 3.5% current dividend yield, McDonald's could now make a great addition to a growth and income investment portfolio.
Additional disclosure: Many of my clients are long McDonald's as well.