This preconception implies that the price of meals is affordable under any circumstances. However, McDonalds proves the adage wrong: its example, like that of Coca-Cola proves on the contrary that the brand has no trouble making its customers absorb price increases.
A strong brand is the best resistance to inflation. This adage is proving to be true: on a constant basis, McDonalds' consolidated sales are up 8%, and operating profit is up 14%.
Productivity gains are real, with sales via the digital channel - which include orders placed at in-restaurant kiosks - continuing to expand: this is allowing the chain to reduce its personnel costs and significantly improve its operating margin.
An operating margin of 40%, which, by the way, is higher than Apple's!
As usual at McDonalds, always relentless in its style, strategic plans are rolled out with a steamroller. Despite a lack of long-term growth, the group remains a formidable source of cash.
Over the last decade, it has generated an annual cash profit of $5.2 billion on average, and has bought back nearly a third of its outstanding shares over the period. As a result, free cash flow per share increases from $4 to $7 between 2012 and 2022.
However, since McDonalds distributes the majority of these profits as dividends, these high-volume share buybacks were financed by a $25 billion increase in debt - an amount that represents between four and five years of profits.
Notwithstanding its extraordinary qualities, the question arises as to the sustainability of such a business model - especially with a valuation that to date exceeds profits by a factor of 40.