"We were consumed with getting bigger and not getting better," recalls Ralph Alvarez, president of North America operations for the Oak Brook, IL-based fast-food giant, who oversees about 15,000 eateries in the US and Canada. "We had taken our eyes off the basis of our business."

Alvarez, speaking at the National Retail Federation's Annual Convention & Expo, said that the company started assessing successful chains, such as Starbucks, as well as its own business, and then began a turnaround plan that has lasted into the present. Now the average McDonald's brings in $2 million per year, $400,000 more than in 2002. November also marked the company's 37th-straight month of positive, year-over-year same-store sales. (Executives will release December results today.)

One of the remedies the company employed was to start renovating restaurants. Currently about half of the chain's North American units will have been revamped by the end of the year, Alvarez says. "An aging facility is symptomatic of a dying brand," he says.