McDonald's (NYSE: MCD) has always been known for its famous French fries. Interestingly enough, though, it seems to me that the fast-food chain is becoming known these days for its coffee. I never thought McDonald's would invest as much as it has in coffee, but it looks like it's doing the right thing. According to this Bizjournals piece, McDonald's is putting its weight behind a coffee-bar initiative called McCafe. The program is being tested in various locations now and will be available nationally sometime next year.

I love the timing on this. After all, Starbucks (NASDAQ: SBUX) isn't doing so well. Not only is its stock hovering around 52-week-low territory, but the java king recently announced some store closings. That's almost unimaginable. Remember the days when every street corner needed a Starbucks? Yeah, those days are long gone. And I think McDonald's is smart in attempting to expand the brand equity of its coffee-brand portfolio. People need more of a reason to go to the palace of the hamburger-serving clown than just Big Macs these days, since the Big Mac and its various fat-saturated colleagues aren't as popular in these health-conscious times. I'm not saying drinking coffee is an exercise in life preservation, I'm just saying that it's good for McDonald's to focus on less controversial fare.

This significant foray into coffee is arguably a key reason for the company's stellar stock performance over the last few years and its competitive edge against rivals Burger King (NYSE: BKC) and Wendy's (NYSE: WEN). According to the AOL Finance snapshot, McDonald's is very much in the green for every timeframe save for year-to-date, which sees the stock down less than 1%. That's strength. McDonald's is a little below its 52-week high, and it might make for an interesting investment idea. At the very least, you can look forward to its McCafe program.

Disclosure: I don't own any company mentioned; positions can change at any time.

McDonald's (NYSE: MCD) may be the big brand name in the fast-food industry, but don't discount Burger King (NYSE: BKC). The King reported its fiscal Q3 numbers on Thursday, and they were pretty regal indeed.

Revenues increased 10%, and earnings per share did even better, rising 20% to 30 cents (that beat earnings by three pennies, says Briefing.com). Now, when talking about retail stores and fast-food joints, the issue of same-store sales always comes up, since it's such an important element to consider (be sure to keep in mind that comps must always be put in an overall context, especially if you are only measuring a one-month timeframe). Global comps increased 5.8% for the quarter, a good showing for Burger King which wants to become a force to be reckoned with around the world. The domestic side of things isn't doing too badly either as comps in the United States and Canada moved up 5.4%. Restaurant margins, however, decreased due to the challenging commodity-cost environment we all live in nowadays. Otherwise, I see these earnings as very positive for Burger King, and I am bullish on the stock.

Fast-food king McDonald's (NYSE: MCD) continues to lure people under the golden arches, with fresh items and an expanded breakfast menu. In October, same-store sales rose by 6.9%, as the restaurateur posted gains across all regions. In the U.S., comparable-store sales were 5.4% higher. Europe saw a 6.4% jump in sales gains, and sales in the Asia-Pacific region, the Middle East, and Africa surged 9.4% during the month.

An article in this morning's Wall Street Journal attributed the surging sales to new products (such as the chicken "snack wrap"), additional breakfast items (offered in an expanded block of time), and a popular value menu, perfect for consumers getting squeezed at the fuel pumps.

Across the board, total sales were 14.2% higher during the month, or up 8.2% excluding fluctuations from foreign exchange rates.

In pre-market action, MCD shares are showing a 1.4% gain. At yesterday's close, the stock was just 2.6% shy of a new 52-week high, so a strong rally today could boost the equity into new-high territory for the year.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Arby's, a unit of Triarc Companies (NYSE: TRY), has just taken first prize in its attempt to one-up the "super-size" fast-food menu with its "Pick 5 for 5.95" value meal.

If you've read Eric Buscemi's Battle of the Brands post: McDonald's vs. Burger King, you know the Big Mac and Whopper do not fall in the category of "healthy" foods. Add in fries and a drink and you've already clogged your first artery. But Arby's takes it one step further: they give you your pick of five fast-food items on a special menu -- two more than the standard value meal at McDonald's (NYSE: MCD) or Burger King (NYSE: BKC).

I went to Arby's for lunch today to pick my "5 for 5.95" and I must say it's overwhelming.

I decided upon an Arby's Melt sandwich with medium curly fries, a medium drink (sounds like the standard fast-food value meal so far but I had two more choices) mozzarella sticks with marinara sauce and a small jamocha shake.

Needless to say, I couldn't finish everything. I sat at my table staring at my unfinished meal thinking of Thomas Aquinas and what he said about gluttony in his SUMMA THEOLOGIÆ, "Gluttony denotes, not any desire of eating and drinking, but an inordinate desire ... leaving the order of reason, wherein the good of moral virtue consists."

This was just too much food, I thought. It defies all reason. How bad is this for you?

This morning, fast-food behemoth McDonald's (NYSE: MCD) reported that its same-store sales spiked 4.8% worldwide in April. Helping drive the sales growth last month, according to company officials, were the kid-friendly Happy Meal, breakfast items, and the new "Snack Wrap" menu offering.

On U.S. soil, same-store sales rose 3.5%. The figures rose 3.5% in Europe and surged 10.3% in the Asia/Pacific, Middle East, and Africa regions (this ties in with Zac's posting yesterday about the expanding waistlines among Japanese women). Total sales rose 9.6% across the globe and 4.2% in the U.S.

With the exception of its fries, and the Big Mac I crave about once every 18 months, McDonald's has never been my favorite, but it's inarguably a force to be reckoned with. And amid complaints from Morgan Spurlock and countless others, MCD has done its part to fight obesity - finding an oil free of trans fats for its french fries, for one, and introducing healthier menu options, such as veggie burgers and better salads.

The company's stock is also an exquisite performer. MCD has been trending higher since early 2003, more than quadrupling in value during the past four years. This month, the stock has eked above its November 1999 peak to peg a new all-time high.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

The Hamburglar vs. The Creepy King

Looking at the financial data for McDonald's Corporation (NYSE: MCD) and Burger King Holdings Inc (NYSE: BKC) tells us that McD's cooks BK on market cap ($53.7B to $2.9B), and that both stocks are up big since BK started trading last May (McD's is up 29%, BK is up 24%). But these brands aren't really found in the numbers. Let's look at the factors that make these fast-food giants the top two burger chains in the land.

The Menu

What's the first thing you think of when someone says McDonald's or Burger King? Probably their signature sandwiches -- the Big Mac and the Whopper -- because they are what make the brands. There are two factors to look at here -- taste and health.

As far as taste goes, my nonscientific survey says that both sandwiches are flawed (yes, I used writing this blog as an excuse to eat fast food twice in the same week). With the Big Mac, most of my problem was finding the two all-beef patties in a sea of buns and lettuce it was surrounded by. With the Whopper, my criticism is that the burger should come with cheese on it without you having to ask (or pay extra). The burger is supposed to be their top-of-the-line; they could at least throw a slice of cheese on it for you, with you making it "your way."

Have you ever sat in a McDonald's Corporation (NYSE:MCD) outlet around lunchtime on a weekend and just watched? Chances are you'll see a family or two, and chances are, the young children will be in possession of a hamburger Happy Meal. And if the family you're watching is anything like mine, or my colleague's, you'll see a pregnant mom (that's me) or dad, with an empty Quarter Pounder wrapper, hungrily eyeing the last bites of the child's burger.

Maybe it was a sight like that that prompted franchisee Scott Frisbee, whose family owns 17 McDonald's restaurants in and around Anaheim, California, to develop the idea that McDonald's needed a premium burger. Maybe it was those ubiquitous commercials for the "six dollar burger" at rival Carl's Jr., a unit of CKE Restaurants, Inc. (NYSE:CKR), and the fact that his menu had no competitive item. Maybe he was just hungry. Either way, the progress of McDonald's Third Pounder from concept to its appearance on California menus is remarkable for its speed -- not to mention its success.

At $3.99, the burger is the most expensive sandwich the company has ever offered -- seemingly counter to McDonald's place in the country's subconscious as the cheapest place to get a family meal. At 720 to 840 calories depending on options, the sandwich seems contrary to America's hopeless striving to become healthier. And after a string of less-than-stellar new menu items in the 80s and 90s, the fast food chain had slowed to focus on its menu standards -- so however did this come to fruition so quickly and to such obvious acclaim?

As expected, McDonald's Corp. (NYSE:MCD) posted strong fourth quarter results. The market, however, seemd to react to the company's annoucement that it plans to invest $1.9 billion this year on opening new stores and revamping existing ones. Investors always react negatively when a company says it plans to put money back into the business.

9:30 a.m. -- I log onto the site for the call which features a picture of a salad. I know they are big sellers but has anyone actually seen anyone at McDonald's order a salad. Maybe I go there at the wrong times. Then I quickly realize that I am there one hour too early. I immediately secure a cafeinated beverage to wake up.

11:30 a.m. -- The call actually is starting. It's a pity since I am digging the bouncy, upbeat jingles. Finally, a company knows how to program hold music. There are pop, hip-hop and Spanish language versions of the jingle. Darn, it's over

11:31 a.m. -- Usual disclosures.

11:35 a.m.-- CEO Jim Skiner. I am pleased to report that 2006 was an outstanding year for McDonald's., Our revenues reached record high. We returned 5 billion to shareholders. Total shareoholder return was 35 percent. "As I said, an outstanding year."

Plan includes financial discipline. Strategy is growing by not just getting bigger. This year, we plan to open 800 new restaurants. 200 US., 150 Europe, 375 Asia. Invest $1 billion in existing restaurants. Our committment is to return at least $10 billion to shareholders. Our plan to win will continue to be operational roadmap.

Continue to add new menu items at breakfast and in chicken sandwiches in US.

1137; IN china. our key growth market. We have the most menu choices amongst our menu set. The drive through is abssolutely critcal to our long-term development. We'll also market breakfast nationally.

.. Our system has never been more alligned. McDonald's is a system that succeeds because we are a franchising org., We are committed to right balance of franchises versus owners.

Matthew Paull, CFO

Clearly we've reached a point where customers and investors agree that McDonalds is better. HIghest operating margins since 2000. US margins were up 30 basis points. The US fourth quarter margin increasis is especially meangingful because there was profit sharing in the year earlier period.

11:41. I can assure you that G&A control is a high priority for the management team. Total shars acquired in 06 were 98 million.

Lookin. The headwinds created by our old compensatipn programs (options) aren't nearly as strong. The company is granting fewer options.

We expect future buybacks to yeiled a meaningful decline in share count because of fewer options.

IN each of our major market in which the legal market is conducive to ranchises., They want less than 30 percent tob ecompany owned. More franchises in U.K. and Canada.

Licensing,

Given our menu . Beef and Chicken are clearly the primarily drivers. The company sees beef down, Chicken up in US, both up in Europe.

"WE are determined to get better at being better at everything we do." Gosh that's vague.

11:47. UBS Congrats. Why do analysts do that? It's annoying. Asks questions about UK market.

Paull: We do see positive signs In Europe.

Goldman: Development license agreements. Timing of agreements? IS the proceeds included in the $5 bln returned to shareohlders

Paull: Have'n't figured out what to do with the proceeds. WE are very, very confident that we will get this done.

"We''re not going to get into specifrics"

Citi: Latin America., company units. Why more company stores in Latin America?

MCD: We had some litigation with our franchiesses .We are through all of that now. We are doing a lot better in Latin America. Our margins improved dramticaly down there.

BofA: Menu price increase going into 07? Competition for breakfast?

Skinner: Breakfast. We're the clear leader. WE are very very proud of our breakfast items. Our delivery at breakfast will continue to improve. WE are focussed on it.

CFO: We've tried to raise prices at slightly below food away from home . If you look at 07, food away from home index, 3.6, slightly ahead from 2006. Certain restaurant companies want to get ahead of minimum wage pressure

For the last four years, when we raised prices to recover prices. saw guest count rise, "speaks to power of brand."

Bear: Plans for Coffee in 2007? US Minimum wage increase, any cost pressure?

Skinner: We have a number of thing in test that include speciality coffees, premium burgers. Breakfast burritos. The coffee has done very, very well for us.We are looking at the potential for speciality coffee in 07, Obviously, we will continue to. There is always going to be some pressure when the minum wage increases., We are paying above the minimum wage now. We don't expect to have a huge pressure with this. MCD pays above minimum wage

Lehman: Debt level?

CFO: WE are about 8.5 bln at the year end. expect to stay there. the average cash balance in 096,

Wachovia: POS system. Improvements?

Skinner: Yes there have been improvements . We still have huge upside potential. We've improved on the accuracy and yet we are not there. WE won't be satisfied. We've made progress but we continue work hard on this. It's a journey not a destination.

CFO: AT the end of 06. POS was in 7,000 in US. Most weren't in US.

Oyster Capital: Extended hours?

CFO: We're very happy with extended hos in the US, Now its expanding to other geographies. We're very satisfied with the margins that we get. The strategy is starting to spread to Asia.

CIBC: How many countries have above 30 percent corporate program?

CFO: Not many are like UK and Canda. Franchising laws and China and Russia aren't there

DB: traffic pickup because of ecoli scare

CFO: Mcdonald's looked into this and found no effect.,

MS: Gift card activations?

Skinner: Had an uptick. Had more sales of giftcards this year. Don't record them until they are spent. We expect them to be better.

Paull: WE adopted this better not just bigger. Internally, we had doubts ourself. WE ar efairly convinced that it is right for us. The specifics. WE are basically goign to be putting our money where are mouth is.

Skinner: Right peoiple are in the right place.,