(FORTUNE Magazine) – Investors who bought into McDonald's (MCD, $28) ambitious turnaround plan last year are, as the fast-food giant's catchy jingle says, "lovin' it." The stock is up a Dow-stomping 133% from its March 2003 low of $12. And the latest batch of good news is all the more striking because of its timing. Just a week after CEO Jim Cantalupo died of a heart attack, the company turned in blockbuster first-quarter numbers: McDonald's drew 2.3 million more customers each day compared with a year ago, sending earnings up 56%. New CEO Charlie Bell summarized the situation neatly in his inaugural conference call with investors in late April: "We have momentum."

Count us among the impressed. While we were early to identify many of the problems plaguing the burger chain back in April 2002, we didn't fully buy into Cantalupo's turnaround plan, which he unveiled a year later (see fortune.com). Turns out he had a lot more in mind than simply rolling out fancy new salads. The big story at McDonald's is that the top brass has become a much better steward of capital. Instead of spending billions each year to frantically open new restaurants, management is pouring money back into existing stores: cleaning up their appearance, extending hours, and speeding up service. Last year Cantalupo also returned nearly $1 billion to shareholders through share repurchases and a fat dividend increase.

Bell has his work cut out for him. Despite the improvements, McDonald's still scores dead-last in customer service surveys compared with other major fast-feeders. And growth gets harder from here. That's because McDonald's faces tougher monthly sales comparisons in the U.S., by far its biggest market. But by announcing to investors that he is sticking to the original three-year turnaround plan--which includes revitalizing foreign restaurants in much the same way as in the U.S. and giving back another $1 billion to shareholders this year--Bell is off to a good start.