January 26, 2008

Operators Who Know Nothing About Equity

I have been informed that there are members of the
McDonald's SET team who take the position that
Operator equity has improved and is better than it
was five years ago.

To believe this one must depend entirely on information
and philosophy provided by Oak Brook bean counters.
"Cash flow" as computed by McDonald's Corp. has little
to do with the value of your stores. It doesn't address
marketability, reinvestment, Co-Op situations, livability,
and tortious interference my McDonald's, etc.

For one thing - the measurement should not be "equity
as compared to five years ago" but equity as what it
should be at this time. It should be - what would your
equity be if changes in corporate policies over those
five years had not demolished the value of stores?

Anyone who thinks that equity has improved should
not be sitting on committees with such responsibility.



Anonymous said...

there are operators and there are operators who will pull the pin on you and run.

Anonymous said...

After re-imaging,a rebuid, DT menu board additions,new product equipmwnt,big increases in food and labor costs, for the first time in many, many, years, I had a few checks bounce. And we hav'nt even started on CBB, ISP upgrades, and who knows what else. McD has too much going on and it's starting to drain our pockets. What Equity???

Anonymous said...

Most of the NLC is full of butt kissing operators who "go along to get along".NOBODY on the NLC understands the power the operators COULD wield if cohesive and united. RESULT= Corp gets what it wants. CBB/Angus are good examples, Corp says it has to be done because they are making them regular menu items, BUT you are not bound by a2008 store lease but the one you signed five, ten, or twenty years ago. They CANNOT retroactively change current leases legally but we let them do it time and again. United we stand, divided we fall.

Anonymous said...

Wow folks!

Just dropped back by since I sold my McMoneypit a few years back, and am amazed that nothing has changed. Stand up, assert your rights, and make the corp (as in corpse) live up to their end of the bargain. Your equity diminishes every time you follow any new directive. By the way, I haven't seen anyone address how much tax you will have to pay when you do finally get someone to buy into the 'system'and purchase your store after you have been using accelerated depreciation...by mcd's MANDATE for all of the years you 'owned' the restaurant. Great way for corp to say the stores are earning a profit, but purpose of that is to show that store are profitable when they really aren't. Get an independent accountant, and believe them when they say your investment sucks. Expect final taxes on the sale of 'your' business to be MUCH higher than you would anticipate if you are lucky enough to get out that way. Best of luck brothers and sisters, I have been in the trenches with you and know how bad it can get.