Pershing Square Activist Presentation Deck
II. Pershing's View of McDonald's
McDonald's
(1) From Grinding It Out: The Making of McDonald's, p. 108.
(2) From McDonald's: Behind the Golden Arches, pgs. 288 - 291.
Historical Perspectives on McOpCo
McDonald's did not historically operate restaurants
The Company initially entered the business of operating
restaurants only as a defensive measure
Limited number of restaurants
"The idea emerged that we should operate a base of ten or so stores as a
company. This would give us a firm base of income in the event the
McDonald brothers claimed default on our contract...” (1)
--Ray Kroc / Founder
Expansion of McOpCo units first occurred in the late 1960s
Veteran franchisees were approaching retirement and needed liquidity
McDonald's stock was provided as a tax-free exchange for the restaurants
"Some of our operators had tremendous wealth but no money. And we
were using McDonald's stock that was trading at 25 times earnings to
buy restaurants for seven times earnings”
--Fred Turner / Former President and CEO
Turner realized in the mid 70s that owning too many McOpCo
units was not in the best interest of the Company
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