7-eleven Best Franchise Performer
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7-eleven Best Franchise Performer

(Sunday, January 07, 2007) - 7-Eleven, the world's largest convenience store, came out on top as the best performer in the second quarter of 2005, while the battle of the burgers saw Wendy's as the second-best performer this quarter as McDonald's tumbled.

The Rosenberg Center Franchise 50 Index developed at the University of New Hampshire Whittemore School of Business and Economics, is an index that tracks the market performance of the top 50 U.S. public franchisors. These 50 franchisors represent more than 98 percent of the market capitalization of all U.S. public companies engaged in business format franchising.

The Franchise 50 Index more than made up its 0.1 percent first-quarter 2005 drop as it gained 0.9 percent in the second quarter 2005, despite a tumble of 10.9 percent in market value of McDonald's, the largest component of the index. The S&P was up 0.9 percent, while the Dow Jones Industrials Average was down 2.2 percent, and the Nasdaq surged 2.9 percent this quarter. Of the 50 components comprising the RCF50 Index, 30 were up while 20 were down in the second quarter.

7-Eleven led the winners with a 26 percent jump, followed by Wendy's International (25.5 percent), and Aaron's Rents Inc. (4.5 percent). The biggest losers were Buffalo Wild Wings (-17.5 percent), Spherion Corp (-11.2 percent), and McDonald's (-10.9 percent).

The stock price of 7-Eleven (SE), the world's largest convenience store, jumped 26 percent in the second quarter after reporting best financial results in more than a decade. "The company's higher profits, total sales and same-store sales were fueled by strong gasoline sales, and new and improved coffee, sandwiches and other offerings. Among its new offerings were a new flavor of its signature icy treat Slurpee branded SpongeBob SquarePants, and Stir Crazy, a frozen dessert."

Wendy's International, the third-largest hamburger chain in the United States, was the second-best performer as its share price rose 25.5 percent. "Wendy's recovered from a steep decline during the first quarter after a customer claimed that she had found a human finger in a bowl of chili bought in a San Jose, Calif., Wendy's restaurant. The claim was found to be a hoax and sales at Wendy's started recovering," according to the report.

McDonald's, the largest component of the RCF 50 Index with almost 20 percent of its market capitalization, was the third-worst performer of the index, losing 10.9 percent of its market value. According to the researchers, in June, McDonald's reported worldwide same-store sales growth of only 1.8 percent, significantly lower than previous months' results.

"Continued weakness in its European operations (1.4 percent drop in same store sales), particularly in its two largest European markets (Germany and the United Kingdom), was negatively received by investors ... Despite this quarter's lackluster overall sales results, the fruit-and-walnut premium salad launched by McDonald's in April this year was a big hit in the United States, helping to boost U.S. sales at stores open longer than a year 4.2 percent in May," the report said.

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