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McDonald's Hits an All-Time High as Steakhouse Chains Bleed Out

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It's tough out there.

The Misery Index is at all-time highs, the European Union's looking at tossing a thirteen-figure sum at its debt crisis, and TV calendars are jammed end-to-end with shows about pawn shops.

But if you need one more sign o' the times, just look at the restaurant business.

McDonald's (MCD), a member of Minyanville's Occupy Wall Street Index, is hitting all-time highs on the back of this morning's dynamite third-quarter earnings report.

The house that Ronald McDonald built delivered a profit of $1.45 a share, beating consensus estimates by 2 cents. Powered by a 5% same-store-sales gain, revenues came in at a better-than-expected $7.2 billion.

McDonald’s saw notable strength in Europe, where operating income grew 15%. Standard & Poor's may be considering dropping France’s credit rating by a couple notches, but the average consumer's still able to pony up a few euros for a Royale with Cheese.

So aside from its operational and logistical excellence, McDonald's is benefiting from the fact that it's an affordable place to get a bite to eat -- an important factor in its remarkable earnings consistency and 19% year-to-date stock price gain. And +19% is pretty darn good in a down year for the broader markets.

If you need additional comparison points, the Powershares Dynamic Food and Beverage (PBJ) ETF is up just 1.2% year-to-date.

And just look at publicly traded purveyors of premium beef Ruth's Hospitality Group (RUTH), and Morton's Restaurant Group (MRT).

Ruth's, which you might know better as Ruth's Chris Steakhouse, is down 3% year-to-date.

Morton's? It's down over 27% on the year.

With disposable incomes under pressure, it makes complete sense that $6 Extra Value Meals are proving to be better business than Ruth's Chris’ $65 per person Steak & Seafood dinner.

But McDonald’s isn’t the only discount-priced restaurant chain hauling in the dough for shareholders:

  • Momentum darling Chipotle Mexican Group (CMG) dropped a monster quarter after the close yesterday, and the stock’s hovering around the $330 level, giving shareholders a 55% year-to-date gain
  • Buffalo Wild Wings (BWLD) is also putting bulls in the black, reporting significantly better-than-expected Q3 numbers on Thursday. Its subsequent bounce has extended that stock’s year-to-date gain above 44%.
  • Yum! Brands (YUM), operator of KFC, Taco Bell, and Pizza Hut, is up about 9% year-to-date.

So while consumers are feeling heat from the lousy job market, they’re still heading out in droves for reasonably priced or downright cheap meals.
POSITION:  No positions in stocks mentioned.