# Coke Vs McDonalds (KO vs MCD)



## fatcat (Nov 11, 2009)

In some ways these stocks are similar.
Both are global, well-recognized brands.
Both are dividend champions with long track records of consistent dividend raises. 

Both companies face challenges of transition. 

Coke needs to move away from its dependence on sugary carbonated beverages. 
McDonald's needs to find menu items that appeal to younger people. I have been eating at McDonald's for 40 some years and still have the same basic simple hamburger and fries. Unfortunately for McDonald's, I eat there only a few times a year.

I have faith in Coca-Cola's ability to adapt to new tastes. I am less confident about McDonald's ability to transition to a fresher menu. 

I would be interested in other peoples opinion of McDonald's (entirely apart from their financials) product and their ability to adapt and change. 
Or perhaps I am wrong and their menu should stay just the way it is. 

I just can't decide if this is a stock to own or not.


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## AudiS4 (Sep 11, 2013)

Whenever I have heard people try and value MCD they say things like it really isn't a restaurant, it's a real estate company that happens to sell burgers in it's prime retail locations. All kinds of things like that.

They fiddle with the menu a lot and I do see people (and kids) eating meals there with apple slices in them etc. I think it's a tough road, but they will change. It's a battle in my area McDonalds versus Tim Horton's, they are building side by side these days and going after the breakfast crowd. Many people seem to be slowly moving to McDonalds, preferring the coffee. I don't drink coffee so I have no personal opinion.

I think KO is a pretty good bet.


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## jcgd (Oct 30, 2011)

I love both McDs and Coke. But coke only offers me pop which I shouldn't drink. I shouldn't eat McDonalds either but I love it and even though I'm not allowed to eat it I still visit often. I drink the coffee daily and when I do get a treat I usually get something from McDs. I think the McCafe is a smart move and I think the demand is high enough for then to continue to do well. I myself would choose McDonalds if I had to choose. 

Wouldn't buy either today though. I don't see any compelling reason.


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## doctrine (Sep 30, 2011)

If either of them became value priced (P/E under 15) I would be a buyer. McDonalds is closer than Coke in this regard.


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## Synergy (Mar 18, 2013)

MCD - I like the brand / company and feel that they have the best chance of adpating moving forward. Personally I wouldn't touch the food, don't drink soda or coffee and despite the small change in consumer behaviour towards healthier options I think they will continue to appeal to a good chunk of the population for years to come. KO is another great brand, but MCD makes a little more sense to me going forward. I currently hold MCD.


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## donald (Apr 18, 2011)

I think it is a more a question on the others in the quick service restaurant space(burger king/wendy's ect)They all face the same challenge and at the core it is the same ''burger and fries'' re the health issues.
I think this is where mcd can grab the advantage long term(ie:tougher headwinds the cream of the croup because more exposed)
I do think half the story is real estate,they strategically have locations in prime areas(far above the others)and they are brilliant in marketing/branding,most 2 yr old around the world can instantly recognize ronald mcdonald and of course the iconic golden arch sign.
They came off a impressive run recently and(2000-2011) and during that time not even that movie that showed the guy dying(super size me)did anything(i would like to see that happen with any other fast food company,remember what happend to jack in box?)
finally,they are one of the best dividend payers(record)in the entire market and i don't see that changing.


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## fatcat (Nov 11, 2009)

Yes, I still think of them as a very strong brand
and I believe they are geniuses with speed, their ordering process is one of the fastest in the business.

Nowadays I am retired and can afford to buy a gourmet burger, so when I think, "I want a hamburger", I tend to think of the many fancy burger joints popping up in the city (at $12 a burger).

Whereas McDonald's is a different thought, which goes something along the line of, "I want to go to McDonald's." I tend to eat there when I am alone and just want to sit in the car and have some protein which is predictable and fast.

They are very good at what they do. Which is fast food and reasonable prices. Also I am pleased to see that they are being more candid about their suppliers and the production of their product.

Their dividend track record while impressive can't continue without a product that people are buying.

Unlike Coke they can't just acquire newer, hotter smaller brands and build on their appeal. McDonald's has to re-do it's own menu.

I do think of McDonald's as a kid’s restaurant. Since they market heavily to young people and that implants the brand in your mind. 

As I am proof, since I still eat there though their hamburgers and fries are just not tasting as good as they used to.
That I think is a function of getting old. Their hamburgers and fries are perfect for young kids.

Also I see that McDonald's continually tweaks its menu and is now thinking of expanding its breakfast menu.
Who knows maybe they will become the fast breakfast restaurant of the future and hamburgers a secondary product ?


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## donald (Apr 18, 2011)

Fatcat ,i think of mcd as a low income play(investors always want to hear the opposite,rising incomes ect,which makes sense)but the flip side is also rising ''lower/margin income people/families/retirees.....population growth in inner cities/rural ect
Mcd is a direct play on that,the poor if you will
Poor people are not going anywhere and where else can they grab protein and potatoes with sugar water for 7 bucks(and its fast/easy ect)
With inequity mcd is clearly on the that side of the fence.
Id also eat at 5 guys over mcd but can the struggling families?
One more thing about the brand....they have strong good will and support a lot of important causes ronald mc house ect ect


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## donald (Apr 18, 2011)

Everybody talks about the health ''craze'' you know the seg that is-the wealthy,the poor are not so concerned with it imo


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## Synergy (Mar 18, 2013)

FYI: The following article was mentioned by the host on Market Call Today this afternoon. However, the guest - Christine Poole suggested to consider something a little more diversified - such as Unilever.

Five reasons why you shouldn’t sell your Coke shares
http://www.theglobeandmail.com/glob...asons-you-shouldnt-sell-coke/article17308800/


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## fatcat (Nov 11, 2009)

Synergy said:


> FYI: The following article was mentioned by the host on Market Call Today this afternoon. However, the guest - Christine Poole suggested to consider something a little more diversified - such as Unilever.
> 
> Five reasons why you shouldn’t sell your Coke shares
> http://www.theglobeandmail.com/glob...asons-you-shouldnt-sell-coke/article17308800/


i own coke and i bought unilever about a month ago, good divvy and excellent exposure to international markets ... i think coke is going to be working hard at diversification (i.e. adding non-sugary and non-carbonated beverages) and i like them because they also have excellent international exposure


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## Synergy (Mar 18, 2013)

^ I placed UL on my watch list now. Looks like a good long term play on the emerging markets.


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## gibor365 (Apr 1, 2011)

i hold both KO and MCD (and also PEP ) and imho all are very good companies...
_I do think of McDonald's as a kid’s restaurant. Since they market heavily to young people and that implants the brand in your mind. _ 
In Europe MCD is considered more like normal restaurant that fast-food. Even in center of Paris, MCD was always full of people.... In Germany I've visited several MCD in middle of nowhere and all was full of people of all ages eating, talking , paying etc.... In Israel the same story, as MCD is one of just few non-kosher chains....


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## atrp2biz (Sep 22, 2010)

I'll never forget this about MCD:

"I'm not in the hamburger business. My business is real estate."


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## Mortgage u/w (Feb 6, 2014)

I like and own both. Solid performers with stable and increasing dividends. I think both stocks have and always will be a 'value' stock. Don't expect crazy gains from either in the short term. Buy and hold and it will serve you well.

As for the reputation of these companies, you'll hear the bad just as you would with any other big corp....but there is more good than bad.

MCD is a classic. Each generation values MCDs for different reasons. You have to admit they have evolved over time and managed to keep attracting customers. Kids love the nuggets and mini-parcs, parents love snacks, grandparents love the ambiance and teens love everything in between. Although the classic menu has not changed, they have added quite a few 'health concious' items. And like you say, you always have the same burger and fries. That's fine cause I always have the chicken burger and love the ice cream. Everyone has something they like.

KO has been able to evolve as well. Do not look at its reputation in North America....look overseas. Their sales are through the roof in that part of the world so the brand is growing strong.


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