Tuesday, May 19, 2015
McDonalds: property, ego and identity
It's pretty clear what is going on here. These countries see airlines and skyscrapers as symbols of national importance and they build both without regard to cost.
But all in all it made me think of the superiority of our Western liberal system. We have bubbles of course - but nothing like this.
In Abu Dhabi I saw very beautiful skyscrapers with government employees spread at one employee per 120 square metres. You could play cricket inside the building and nobody would notice. Just empty space.
So I get to Milan - and 50 metres from the Duomo I am wondering through a very famous shopping arcade in the early morning. Here is the photo.
Turn around 180 degrees and this is the view:
Yeah, there it is, Mickey D's (NYSE:MCD).
They can't possibly be making money here - just planting the flag amongst all the Italian restaurants.
This is a statement of ego rather than anything else. It doesn't have the grandiosity of Doha, but then McDonalds is not as rich as Qatar. The ego/motivation is the same.
They would be better off closing this and dedicating the savings to keeping the toilets in the US restaurants clean.
But then property has often been a statement of ego - and US mega-corporates are not immune.
PS. If Carl Icahn controlled a big stake in MCD this store would close. Carl often brings some rationality to these things.
The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.