June 13, 2025
Give That Site a Second Chance
While we don't know all the details about the aforementioned McDonald's site in Southhaven, MS., it brings back memories of the "Cannibalization Strategy" from the 1990s. In brief, the corporation was eager to build as many stores as possible as quickly as possible. It was not uncommon for the McDonald's real estate department to have taken the position that a particular town or locality was not ready for a new McDonald's store. But, a year later, with no significant changes or population growth, the corporate guys would announce the area was now ready for a new store. Just to get one more in the ground.
June 11, 2025
A McDonald's Rebuild That Took Thirty Years
June 8, 2025
June 7, 2025
June 1, 2025
It's Cannibalization All Over Again
In December of 2023, McDonald’s Corp. announced a goal of operating 50,000 stores worldwide by the end of 2027.
It’s challenging to track exactly what this means for McDonaid’s USA since the announcement combines the USA and IOM. Some press articles stated that the target for the USA is as low as 600 new stores. Some reporters thought management is targeting 900 or 1,000 for the USA. Six hundred stores are a substantial number, especially considering the current circumstances.
In the year 2023, there was no increase in the number of stores in the USA. In 2024, the count increased by approximately 100 stores. The first-half of 2025 results, to be released in August, should provide valuable insights.
December 2027 is approaching quickly. It’s two and a half years away, or 30 months. Let’s guess that McDonald’s USA has opened 100 new stores in the first half of 2025. That’s twice the pace of 2024.
The trouble is, if we stick with the 600-store number, it means 100 opened in 2024 and 100 so far in 2025. That leaves 400 stores for McDonald’s USA to open in the next 30 months. That’s a lot for a company that has been in the business of downsizing over the past decade. Can the domestic system handle 600 new stores? 700?1,000?
This is a repeat of the 1990s “Convenience Strategy”, Oak Brook fell on their face trying it back then. And that was when the corporation was staffed with experienced, knowledgeable people.
Speaking of Same Store Sales
When discussing new stores with McDonald’s Owner/Operators, we often get sidetracked by the finances of a particular new store, when the real issue is the cannibalization of the Operator’s existing stores.
Sure, one can argue to get a point or two shaved off a new store’s rent and royalties, but what about that 25% cannibalized from your older stores?
Speaking of sales, if Accelerating the Arches goes forward, you can forget about same-store sales for 5 or 6 years. It’s impossible to increase same-store sales while saturating the market with new stores; Newer, smaller chains can do it, but not at the age of 70.
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