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West Australian
4 days ago
- Business
- West Australian
THE ECONOMIST: Hungry investors are McLovin McDonald's right now. But do golden arches have silver linings?
The success of the Golden Arches rests on three simple, sturdy foundations: a menu of reliably decent grub, at a decent price, shored up by catchy marketing. Ever since it went public in 1965, McDonald's has done best whenever it stuck to this original blueprint. When one or more of these pillars crumbles, the fast-food fortress looks shaky. A quarter of a century ago this led to a near-collapse. Overly rapid expansion in the number of outlets and, at the same time, of products on offer made it harder for burger-flippers to keep up, hurting reliability. A price war with Burger King turned downright indecent. And the ads were stale, too. The result was acid reflux for investors. Between late 1999 and early 2003 the company shed two-thirds of its market value. The wobble in the first six months of 2024 was mild by comparison. But it still made investors nauseous. McDonald's shares lost 16 per cent of their value between January and July, their worst half-yearly run since the global financial crisis of 2007–09. This time the wonky pillar was affordability, especially in America. Post-pandemic inflation had pushed average McDonald's prices up by 40 per cent from 2019. Videos of $US18 ($27) Big Mac combos went viral. The company's own forgettable marketing efforts did not. Realising its mistake, in July 2024 McDonald's launched a $US5 ($7.50) meal deal, comprising a burger, fries, nuggets and a fizzy drink. In January it packaged this together with a 'buy one, add one for $US1' offer and digital-only promotions in its app, which it called the McValue menu. McValue's memorable face is John Cena, a beefy wrestler turned Hollywood superstar. In another marketing coup, in March and April diners ate up Minecraft Movie Meals, promoted in collaboration with the video-game-inspired blockbuster, so fast that the included collectibles ran out a fortnight into the weeks-long campaign. A food-safety snafu affecting outlets in 14 states in October proved mercifully short-lived. All this has worked a treat. On August 6 McDonald's unveiled hearty results for the second quarter. Revenue, derived primarily from the licence fees, royalties and rents which franchise operators hand over to headquarters in Chicago, rose by 5 per cent, year on year, to $US6.8 billion ($10.2 billion). The preferred industry measure of same-store sales increased by 3.8 per cent globally and 2.5 per cent in America, a big improvement on four consecutive quarters of no growth or worse. McDonald's operating margin, already the industry's envy, topped 47 per cent for only the fourth time in the company's history. Investors are lovin' it, sending McDonald's market value up by 3 per cent after the earnings announcement, to $US221 billion ($330 billion). They are certainly preferrin' it to its fast-food rivals. The day before, Yum! Brands, which owns KFC, Pizza Hut and Taco Bell, saw its stock slip after its latest results came in less than finger-lickin' good. Those of Shake Shack and Chipotle, slightly fancier fast-casual chains, crashed by a fifth in the past month after each reported fewer takers for their burgers and burritos as middle-class American diners stayed away amid mounting uncertainty over the health of the world's biggest economy. As the earlier meagre quarters showed, McDonald's is not unshakeable. But aspects of its business model do allow it to withstand recent shocks better than its competitors. Take tariffs, which President Donald Trump is slapping on trading partners left and right. Given that America imports lots of food, from Brazilian beef to Colombian coffee, these levies are bound to raise restaurants' costs. In the case of Chipotle, which runs all its own outlets, or Shake Shack, which operates 329 of its 579 eateries, tariffs result in a direct hit to the bottom line. For McDonald's, these costs are borne by franchisees, who manage 95 per cent of its 13,500 American stores (and a similar share of its 30,000 or so foreign outposts). Since their payments to McDonald's are a function of sales rather than profits, franchise operators' margins can shrink without necessarily hurting the brand owner's earnings. JPMorgan Chase, a bank, calculates that it would take cost inflation of 7.5 per cent for McDonald's to feel any hit to net profit, and then only of about 1 per cent. A cost increase of just 2.5 per cent would dent Chipotle's net profit by 4 per cent and Shake Shack's by 9 per cent. For less global rivals the tariff pain is compounded by a weaker dollar, the result of Mr Trump's chaotic economic stewardship, which makes imports dearer still. McDonald's, by contrast, peddles burgers in over 100 countries and earns 60 per cent of its revenues in other currencies, compared with 43 per cent for Yum! Brands, 3 per cent for Shake Shack and 2 per cent for Chipotle. A softer greenback boosts the dollar value of these foreign sales. Yummy, indeed. Still, as investors digest the good news, they should consider two potential snags. First, McDonald's frugal menu disproportionately attracts lower-income consumers. These diners, as the company's CEO Chris Kempczinski admitted on the latest earnings call, continue to feel 'a lot of anxiety and unease'. Rather than eat out, some are opting for groceries, notes Mr Dennis Geiger of UBS, a bank. Diners with fatter wallets may prefer rival joints such as Chili's, which offers a starter, main and drink for $US10.99 — and has waiters. McDonald's risks ending up too pricey for the poor and not posh enough for the less so. Keeping prices in check is, then, vital. Yet so is keeping franchisees happy. These two imperatives are in tension. Franchise operators are permitted to set their own prices — which explains why a Big Mac will set you back $US4.36 in Austin (the same in today's dollars as the 45 cents the first one cost in 1967) but $US7.06 in Seattle. Urging them to flog McValue menus may squeeze them to breaking point, especially as their costs balloon. McDonald's may be in a sweet spot right now. But this doesn't mean things can't sour.
The Age
29-07-2025
- Business
- The Age
Trump will be furious as China gatecrashes $35 billion party
On Monday, after the period of exclusive negotiations for the consortium ended, Hutchison announced it remained in discussions with the consortium 'with a view to inviting (a) major strategic investor from the PRC to join as a significant member of the consortium.' 'Changes to the membership of the consortium and the structure of the transaction … will be needed for the transaction to be capable of being approved by all relevant authorities,' it said. It also reiterated previous statements that it wouldn't proceed with any transaction that didn't have those approvals. The key approval needed is, of course, China's. Hutchison is a Cayman Island-registered, Hong Kong-listed private business founded by Li via the acquisition of control of the venerable Hong Kong trading house, Hutchison Whampoa, in 1979. It has reduced its exposure to China and Hong Kong over the years and now generates only about 12 per cent of its revenues from Greater China. It has substantial infrastructure and telecommunications interests in Europe, North America and Australia, where it owns the container terminals in Sydney and Brisbane, a 25 per cent interest in TPG Telecom and a significant portfolio of energy and transport infrastructure assets. Loading At face value, it shouldn't have been particularly vulnerable to pressure from Beijing, but it has obviously bowed to that pressure, which has reportedly included a directive from Beijing to its state-owned firms not to deal with any businesses linked to the Li family. Li Ka-shing's son Richard's ambitions of expanding his insurance business into the mainland have apparently been stalled, if not blocked. The 'major strategic investor from the PRC' that Hutchison referred to in its stock exchange release is almost certainly the state-owned Cosco, one of the world's largest shipping and marine logistics companies. The buying consortium was told that if Cosco wasn't included in the deal the sale of the ports would be blocked. There have also been reports that Cosco is seeking rights that would enable it to veto any decisions by the consortium considered inimical to China's interests. Including Cosco in consortium will create another point of tension between the US and China. Not only does Trump have a fixation with the Panamanian ports, to the point that he has threatened an invasion of Panama to gain control of them, but his administration has taken aim at China's global leadership in shipbuilding and container shipping. The US is proceeding with plans to charge punitive fees on Chinese-built ships entering US ports; fees that start at $US18 per net tonne of cargo, or $US120 per container, that would increase incrementally over time. Trump's ambition is to rebuild the US ship building and shipping industries. The US builds only a fraction of a per cent of the world's large commercial ships and has no meaningful presence in the global cargo shipping market. The collision of interests between the two major powers over the ports sale was regarded as important enough for it to be raised at the trade negotiations the US and China held in Switzerland in May. When the deal, and BlackRock's involvement in the acquiring consortium, was announced, Trump hailed it as both a victory for America and a personal triumph. Trump isn't going to willingly allow a Chinese state-owned company to have a substantial interest and say in the operation of the ports in Panama. China, which sees influence over the ownership of ports and shipping logistics around the world as a critical component of its geopolitical strategies, isn't going to readily relinquish either its influence over Hutchison or, if Cosco is successful, an opportunity to gain a more direct stake in the ports. One possible solution raised is the carving out of the Panamanian ports from the larger deal, allowing US interests to control those ports while clearing the way for Cosco's involvement with the rest. That would, however, mean China would be relinquishing whatever influence it has today over the fastest shipping route between Asia and the east coast of America. The other would be that the deal falls over and the status quo prevails, although Hutchison, which stands to clear $US19 billion of cash from a sale, would see that as a major lost opportunity. Trump's trade wars and his new port charges for Chinese-built or operated ships will have massively disruptive effects on global supply chains and global port activity and container shipping volumes. Indeed, they are already having an impact, with container volumes at America's west coast ports falling away as his tariffs take effect. Loading The planned sale and exit from the ports was therefore well-timed and an example, if one were needed, of Li Ka Shing's business acumen. Now he and his family find themselves caught between the proverbial rock and a hard place, trying to sell highly strategic global infrastructure assets in the middle of a global trade war and a geopolitical struggle between the world's two major powers.
Courier-Mail
10-06-2025
- Entertainment
- Courier-Mail
Ellen DeGeneres, Portia de Rossi cop huge $8m+ loss on last US home
Ellen DeGeneres and Portia de Rossi are set for a massive loss on one of their last remaining US homes, knocking $US5.4 million ($A8.2 million) off their original asking price. The comedian, who is currently living in an $US18 million ($A28 million) farmhouse in the Cotswolds, about two hours outside of London, initially put the sprawling home on the market in May 2024 for $US33.9 million ($A53.9 million), Realtor reports. With no sign of a buyer, the house was delisted three months later and remained off the market through the end of 2024. After news of their move was made public, the couple relisted the home in January with a reduced price of $US29.99 million ($A47.8 million) — just $900,000 more than what they paid for it in 2022. But even that discount failed to attract buyers, and the residence was once again taken off the market in May. Now it's back, with a significantly reduced price of $US28.5 million ($A43.7 million), exactly half a million under the pair's purchase price. It's believed the property is one of the last remaining homes DeGeneres and de Rossi currently own in the US. RELATED:'Toxic' Ellen's US escape plan unravels with dud deal 'Get the hell out': Ellen's sad goodbye 'Toxic' Ellen's final $8m insult to US exposed The couple have sold several properties over the past year since moving to the British countryside. The duo recently sold a two-bedroom in Montecito for $US5.2 million ($A8.2 million), more than $US200,000 ($A312,000) over its $US4.995 million ($A7.9 million) asking price. The property flew off the market less than two weeks after it was listed in March this year, around four months after DeGeneres and de Rossi moved to the UK. However, the success they had with that home has not translated to the Neutra property, which sat on the market for 109 days before its listing was removed. A sale would mark only the fourth time the property has changed hands since it was built in 1955 by famous Austrian-American architect Richard Neutra, having been owned by the same family for 40 years until finally being sold for the first time in 1994. That owner, who purchased the modernist home for the bargain price of just $US1.42 million, held onto the property for a further 25 years before putting it on the market in 2019, when it sold for $US20 million. Three years later, DeGeneres and de Rossi added the five-bedroom pad to their already-impressive property portfolio, paying out $US29 million for the dwelling. They have since renovated the home extensively, helping to restore Neutra's 'pioneering vision,' while also adding a host of modern-day amenities. Per the listing description, the home, which is widely known as 'The Brown House,' has plenty to offer a potential buyer, not least the architectural caché that comes from owning a Neutra design. 'Originally crafted in 1955 by the renowned Richard Neutra, [the house] stands as a quintessential architectural masterpiece nestled in the prestigious enclave of Bel Air,' the listing states. 'One of the most iconic homes to be built, it has undergone a meticulous restoration, thoughtfully revering Neutra's pioneering vision while integrating modern luxuries. A true encapsulation of living in a work of art.' The home also offers sweeping views of the Los Angeles skyline, as well as two 'state-of-the-art' kitchens and a sizeable living area. 'This is a rare opportunity to acquire a piece of architectural heritage, offering a lifestyle marked by grandeur and exclusivity in one of the most coveted locations,' the listing concludes. Their struggle to find a buyer for the property has not held the couple back from investing in new real estate in the UK, where they are understood to have snapped up an $US18 million ($A28 million) farmhouse in 2024, according to People magazine. Since then, the couple — who made a second career out of flipping homes in and around California while they were living in Montecito — have been carrying out extensive renovations to the abode, which have landed them in some hot water with their neighbours. According to the Daily Mail, DeGeneres found herself 'in peril of getting on the wrong side' of a high-profile member of her new neighbourhood after she 'committed a 'technical breach'' during the build of a single-story extension at her new home. The outlet described it as a 'planning clash'. Several neighbours voiced their objections to the couple's plans. Despite the protests, a spokesperson for West Oxfordshire Direct Council insisted that the work was 'completed to a high standard,' according to the New York Post. 'The works at the property involved a single-story extension and garden landscaping,' the spokesperson said. 'Although the extension technically breached permitted development rights, it was considered acceptable in planning terms. 'As the works were completed to a high standard with no impact on surrounding amenities or other planning concerns, no further enforcement action was necessary, and the case has been closed.' Parts of this story first appeared in Realtor and was republished with permission. Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox. MORE: 'Gone, everything': Gibson on trashed pad 'Unreal': Who got what in Hugh, Furness split 'Don't give f**': Billionaire MrBeast needs cash
Herald Sun
10-06-2025
- Entertainment
- Herald Sun
Ellen DeGeneres, Portia de Rossi cop huge $8m+ loss on last US home
Ellen DeGeneres and Portia de Rossi are set for a massive loss on one of their last remaining US homes, knocking $US5.4 million ($A8.2 million) off their original asking price. The comedian, who is currently living in an $US18 million ($A28 million) farmhouse in the Cotswolds, about two hours outside of London, initially put the sprawling home on the market in May 2024 for $US33.9 million ($A53.9 million), Realtor reports. With no sign of a buyer, the house was delisted three months later and remained off the market through the end of 2024. After news of their move was made public, the couple relisted the home in January with a reduced price of $US29.99 million ($A47.8 million) — just $900,000 more than what they paid for it in 2022. But even that discount failed to attract buyers, and the residence was once again taken off the market in May. Now it's back, with a significantly reduced price of $US28.5 million ($A43.7 million), exactly half a million under the pair's purchase price. It's believed the property is one of the last remaining homes DeGeneres and de Rossi currently own in the US. RELATED:'Toxic' Ellen's US escape plan unravels with dud deal 'Get the hell out': Ellen's sad goodbye 'Toxic' Ellen's final $8m insult to US exposed The couple have sold several properties over the past year since moving to the British countryside. The duo recently sold a two-bedroom in Montecito for $US5.2 million ($A8.2 million), more than $US200,000 ($A312,000) over its $US4.995 million ($A7.9 million) asking price. The property flew off the market less than two weeks after it was listed in March this year, around four months after DeGeneres and de Rossi moved to the UK. However, the success they had with that home has not translated to the Neutra property, which sat on the market for 109 days before its listing was removed. A sale would mark only the fourth time the property has changed hands since it was built in 1955 by famous Austrian-American architect Richard Neutra, having been owned by the same family for 40 years until finally being sold for the first time in 1994. That owner, who purchased the modernist home for the bargain price of just $US1.42 million, held onto the property for a further 25 years before putting it on the market in 2019, when it sold for $US20 million. Three years later, DeGeneres and de Rossi added the five-bedroom pad to their already-impressive property portfolio, paying out $US29 million for the dwelling. They have since renovated the home extensively, helping to restore Neutra's 'pioneering vision,' while also adding a host of modern-day amenities. Per the listing description, the home, which is widely known as 'The Brown House,' has plenty to offer a potential buyer, not least the architectural caché that comes from owning a Neutra design. 'Originally crafted in 1955 by the renowned Richard Neutra, [the house] stands as a quintessential architectural masterpiece nestled in the prestigious enclave of Bel Air,' the listing states. 'One of the most iconic homes to be built, it has undergone a meticulous restoration, thoughtfully revering Neutra's pioneering vision while integrating modern luxuries. A true encapsulation of living in a work of art.' The home also offers sweeping views of the Los Angeles skyline, as well as two 'state-of-the-art' kitchens and a sizeable living area. 'This is a rare opportunity to acquire a piece of architectural heritage, offering a lifestyle marked by grandeur and exclusivity in one of the most coveted locations,' the listing concludes. Their struggle to find a buyer for the property has not held the couple back from investing in new real estate in the UK, where they are understood to have snapped up an $US18 million ($A28 million) farmhouse in 2024, according to People magazine. Since then, the couple — who made a second career out of flipping homes in and around California while they were living in Montecito — have been carrying out extensive renovations to the abode, which have landed them in some hot water with their neighbours. According to the Daily Mail, DeGeneres found herself 'in peril of getting on the wrong side' of a high-profile member of her new neighbourhood after she 'committed a 'technical breach'' during the build of a single-story extension at her new home. The outlet described it as a 'planning clash'. Several neighbours voiced their objections to the couple's plans. Despite the protests, a spokesperson for West Oxfordshire Direct Council insisted that the work was 'completed to a high standard,' according to the New York Post. 'The works at the property involved a single-story extension and garden landscaping,' the spokesperson said. 'Although the extension technically breached permitted development rights, it was considered acceptable in planning terms. 'As the works were completed to a high standard with no impact on surrounding amenities or other planning concerns, no further enforcement action was necessary, and the case has been closed.' Parts of this story first appeared in Realtor and was republished with permission. Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox. MORE: 'Gone, everything': Gibson on trashed pad 'Unreal': Who got what in Hugh, Furness split 'Don't give f**': Billionaire MrBeast needs cash
West Australian
05-06-2025
- West Australian
Hidden food gems in the US you have have to try
Nothing quite beats finding your own little gem of culinary pleasure. The US may have a reputation for fast food, doughnuts and bad coffee, but a recent trip showed this is undeserved. We took to the side streets, as we have done in London and Italy, hoping to stumble upon a local cafe, bar or market that made the adventure worth it — and we were rewarded handsomely. I love the thrill of discovering an unassuming diner with incredible food, a hidden treasure that becomes the highlight of your trip. If you're ever in these parts of America, do yourself a favour — pull up a seat, and grab a menu. 604, E 1300 S, Salt Lake City, Utah A local corner diner serving up homestyle breakfasts across the road from Liberty Park. All the American classics are here, some with a twist. They have pancakes (of course) but in this part of the world they come in the form of a sandwich, with eggs and bacon as the filling. Omelettes are a main attraction, with nine variations to choose from. But my pick on the menu is the corned beef hash. It's slow-roasted in-house, grilled with onion, mushroom, green peppers and potatoes, topped off with two eggs — $US11.50 ($17.85). We shared this breakfast, but came back the next day and had one each it was so good. 329 Donelson Pike #201, Nashville, Tennessee Located in Nashville's Donelson neighbourhood, this is a big, modern-looking space with a great outdoor dining deck. The menu draws inspiration from the dining traditions of the south and takes you on a delicious trip through Tennessee and Mississippi. The meals are big (we are in America after all) so you can easily share these meals. Some of the standouts are the breakfast casserole, country fried steak biscuit, fried catfish sandwich, and sweet potato pancakes. However, I couldn't look past the shrimp and grits — Gulf shrimp sauteed in garlic butter with bacon, slow-cooked okra and tomatoes over grits, plus a biscuit — $US18. Grits is basically a porridge made from ground dried corn, and if you've never had it before (or even if you have) you need to try this version. 416 Broadway, Nashville, Tennessee After a night of bar-hopping and live music along Nashville's Broadway, there's nothing better than a feast of meat. Most of the bars along this strip offer the same fare, but for a more authentic and unique southern experience, head to Jack's Bar-B-Que. This canteen-style servery carves up Tennessee pork shoulder, beef brisket, turkey, ribs, smoked sausage and smoked chicken for your late-night cravings. There's always a line, but it moves quickly. You choose your meat. My choice was the two-meat combo — St Louis-style ribs and Texas beef brisket — and they cut it in front of you. You then move on down the line to choose from an array of traditional sides including baked beans, green beans, corn, baked apples, coleslaw and potato salad, and crowd favourite mac and cheese. It's carnivore heaven! The two-meat combo plus two sides and bread costs $US24.20, and you can easily share it between two people. 613 Royal Street, New Orleans, Louisiana When you take your seat in the vine-covered courtyard in this legendary New Orleans restaurant, you feel like you've been transported back in time. They have daily jazz brunches headlined by a buffet of Creole classics such as southern corn grits, chicken & sausage gumbo, turtle soup, fried catfish, shrimp etouffee, red beans & rice, stewed okra, creamed spinach, and biscuits and cornbread. For dessert you can't go past the bananas Foster and vanilla ice-cream, or pecan pie and homemade whipped cream. For me, the turtle soup was a standout and worth the visit alone. The soup itself is more like a stew with gravy-like consistency, and the turtle meat actually tastes like beef — it was delicious. Jazz brunch buffet — $US36 (don't eat beforehand). 200 Fifth Avenue, Midtown, New York OK, so I know there are thousands of great places to eat in New York, many of them very well known, but I hadn't heard of this vibrant Italian marketplace before. We stumbled on it while walking just off Broadway near the Flatiron Building. It's like walking into an episode of Stanley Tucci: Searching For Italy. Comprising a variety of restaurants and food counters (Roma-style pizzas, rotisserie meats, focaccia and panini) plus market-style counters (seafood, butcher, pasta, fruit and vegetables), it also has a genuine Italian espresso bar, bakery and retail items. There's something here for everyone's taste. It's the American/Italian version of Borough Market in London. Prosciutto crudo panino 'Emiliano' — $US19.90 (these are big enough to share between two). 179 E Houston Street, New York Just down the street from Katz's Deli (another must-visit New York destination) this Jewish institution has been appetising New York since 1914. Used as a noun, 'appetising' is most easily understood as 'the foods one eats with bagels'. The menu is pretty straightforward — bagels. But you do have a big choice of what you have with it. You choose either salmon (six versions), cured salmon (four versions), smoked fish (eight versions) or herring (nine versions), plus your choice of spreads and sides. The bagels, freshly baked in-house, were the best I tried in New York. Like a lot of places in New York there can be a line-up around breakfast and lunchtime, but there are as many servers behind the deli counter as patrons ordering, so it was a fairly quick experience. A classic bagel and lox (salmon) bagel — $US17 (do not share — have it all to yourself).
