March 20, 2019

McDonald's Presents at JPMorgan Conference

On Friday McDonald's.CFO spent 45 minutes with an analyst from J.P. Morgan.

I'll never understand why they send out a bean counter to discuss operations and 
marketing, but the analysts share the same type of education so they take him/her 
seriously.

About half-way through the discussion the CFO talks about Operator cash flow and 
for the first time McDonald's has admitted that the Operator cash flow numbers they 
give Wall Street are "pre-debt".   

Here's the Seeking Alpha Transcript
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March 16, 2019

Poultry in Motion


At the end of February, a memo from the NOA board expressed some frustration with the development of "a better chicken sandwich".

On March 5 a press release appeared on the McDonald's corporate website featuring the "test" 
of "Mighty Chicken" in Augusta GA.

Now, I don't hang out on the McDonald's website very much but I've been there enough to know
that announcing a small market (35 stores) test on a website available all over the globe means 
it's not a "test", it's a done deal.

Local press in the test market? Absolutely. But it's not global news unless all of the decisions 
have been made. I wouldn't be surprised if this product isn't already on the OPNAD calendar.

Otherwise, it wouldn't be on McDonald's global website.

Here's the corporate press release:

Testing Mighty Chicken in Augusta, Georgia - McDonald's Corporation
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March 9, 2019

News on McDelivery

A skilled negotiator knows to avoid making an initial offer that might be insulting to 
the other party. Best example - a home buyer making an extreme low-ball offer that is 
so far below the listing price that it insults the seller's judgment and their beloved
homestead.

That was my reaction to the proposed corporate rent caps on  McDelivery sales. It
will apply to so few stores that it's an insult to the intelligence of the Operator 
community. And there wasn't any real thought put into it. The majority of restaurants 
are still below 20 McDelivery orders a day so they just double that and make 40 orders
the starting point for rent relief?

At least it's a springboard point for discussion. I like the goal of making McDelivery transactions as profitable as drive-thru transactions. A stretch goal but a good one.

And it's also good to hear that OPNAD is holding off advertising McDelivery. Let Taco 
Bell waste their advertising dollars. 

This weekend's WS Journal contains an article about restaurant and grocery delivery. 
It's behind their paywall so you'll need a subscription to their website.


Here's a pull quote: "McDonald’s Corp. started using San Francisco-based Uber Eats
for delivery in January 2017. In a survey that a newly formed association of franchisees conducted of its members in January, 565 respondents said that delivery is not contributing positive net cash flow to the business, while 198 said it is.​"​

Too Many Stock Buybacks? A Debate

"So while franchisors spend billions to make Wall Street happy, they would be wise to 
spend something on the innovation and support necessary to stand out on Main Street."

In the last two years, McDonald's spent more than $16 billion on share repurchases.  

Too many stock buybacks? - Franchise Times - March 2019
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March 6, 2019

Funny or Sad?

It's ironic that while environmentalist wackos are trying to shut down tiny things like plastic straws the restaurant industry is developing more and more packaging for delivery and take-out.

Los Angeles bans self-service plastic straw dispensers

Packaging could be the new differentiator in to-go - Slideshow



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