Where's the Beef? Maybe in the Fryer

Steak 'n Shake (and others) converting to beef tallow for cooking fries

Papa John's: Eliminating Local Co-Ops a "big miss"

National marketing is more efficient - until it isn't: Maze

OPNAD once made a lot of sense; now it just centralizes $$$ and power in Chicago

 

More Than You Want to Know About Gavin Newsome

No, really, why is Gavin Newsome, Governor of California? - Opinion

Are There Too Many McDonald's?

One big reason for 2024's closures: Too many restaurants - Maze

 

McDonald's Closes Three Cosmc's

It's a story that repeats itself every 15 or 20 years. McDonald's executives (with no restaurant experience or knowledge) desperately want to be considered "restauranteurs." With other people's money and tons of excess real estate, they make a lot of mistakes.

MCD closes 3 Cosmc's - Restaurant Business Mag

McDonald's Wrestles With Sales

 

This is a nice change. Too often, McDonald's headquarters gets enamored with "artists" who do nothing but scream obscenities and lead PDiddy lifestyles. Cena appears to be the opposite.

John Cena pitches McDonald's McValue Menu

McDonald's Says Bye to DEI?

McDonald's will still be a Woke, DEI, Politically Correct company because of recent hires and the pajama boys at the top

McDonald's Real Estate, Part Deux

Our real estate discussion has gotten a little off track since we can't change the long-standing McDonald's Owner/Operator facility ownership policy. I intended to discuss modern McDonald's real estate as it applies to the McDonald's franchise. There are things happening today that were unthinkable 20 years ago.

For instance, a McDonald's in western Michigan just closed, yet according to satellite photos, it looks like a contemporary facility. Someone spent a lot of money developing and improving this store, yet the Owner/Operator had to walk away. Is this happening more frequently?

Stevensville MI is directly across the lake from Chicagoland

This is why it's a good idea to know the real estate status of each of your stores.

But as long as the history of Owner/Operator capital investments has been mentioned ... there's little fruit in comparing what McDonald's policies were in the early years and their motives today.

When it came time convert the red and white buildings to 1970s designs McDonald's was a public company but not rich. Having the money to grow and also remodel wasn't in the budget. However, the remodels, especially the addition of seating, brought huge sales increases, and management felt the operators could pay for some or all of the remodel. Adding drive-thrus brought a further sales boost, and the idea that Operators would pay for remodels became a permanent policy.

The idea that Owner/Operators should pay for "system image" was not discussed. It was all about sales increases, as were the original "Newman Deals".

So comparing corporate policy and motivations today to the first twenty years doesn't accomplish much; these are two different companies: the first, essentially a start-up, today an international money machine run by corporate raiders.

McDonald's Real Estate

 

During his outstanding presentation on the December '24 NOA webcast, Attorney Robert Zarco reminded us that McDonald's is essentially a real estate company that sells hamburgers. He made many recommendations that assume McDonald's Owner/Operators thoroughly know the real estate status of each of their restaurants.

Is that the case, or are Owner/Operators just relying on verbal representations from McDonald's corporate employees?

A little history: When Ray Kroc founded McDonald's, the Owner/Operator was usually responsible for providing the land and building.

As the company grew, the corporation provided facilities, and the real estate became a part of the franchise relationship.

When McDonald's selected a site, one of the criteria was that there would be a McDonald's at that location in perpetuity.

A purchase was always best; if a lease, there would be substantial options.

This long term mentality enhanced McDonald's portfolio and also allowed Owner/Operators to build equity.

But despite its reputation, perpetuity isn't forever. Under the new corporate management, real estate thinking might have changed. But, since everyone of the 14,000 USA locations are different, it would be difficult to identify any trends.

Is this an issue that Owner/Opertors should be discussing? 

Or is it no big deal?

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