Hottest Profit Ratio Growth

McDonald’s is taking advantage of consumer thriftiness by doing what it has always done — providing low-cost, ready-to-eat food in ubiquitous convenient locations. And this formula works as well overseas as it does at home.

CEO Jim Skinner told shareholders that 2008 was “a banner year” in which operating profit rose 17 percent. An indication of that strength: McDonald’s was one of only two companies included in the Dow Jones Industrial Average whose shares rose in value last year (Wal-Mart was the other). Skinner also told annual meeting attendees that he expects the momentum to continue through 2009, when McDonald’s plans to spend $1.1 billion to add about 650 units, including 240 in Europe. The company will also spend about $1 billion to remodel older units.

One of the factors in McDonald’s success is its coffee. It has engaged Starbucks and Dunkin’ Donuts in the battle for the breakfast trade, and is rolling out its McCafé concept — which proffers hot and cold coffees and other beverages — to 11,000 of its 14,000 U.S. outlets.

Gymboree also benefits from having franchised units play a major role in its operations. The ability to reduce selling, general and administrative expenses by 1.2 percent and inventory levels by 4 percent in its most recently completed fiscal year contributed to its hot profit ratio.