June 13, 2010

McDonald's & "Restaurant Technology Services"

McDonald's is entering a third cultural phase:

In the early years vendors were kept at arms
length. In the 1980s and 1990s the second
generation of McDonald's management was
unable to resist the temptation to skim
income from the supply chain. But at least
they tried to do it secretly, under the
table, behind franchises' backs.

With the establishment of Restaurant Technology
Services it's obvious there is no longer any concern
about what franchisees think. And, as supplier/vendor
to the franchised system McDonald's is obviously not
worried about potential legal issues.

In the long history of franchising this issue has created
more conflict than any other. It would be productive if
McDonald's franchisees could get out in front of this
third cultural phase.



Richard Adams said...

From Ray Kroc:

"One of the basic decisions I
made in this period affected
the heart of my franchise
system and how it would develop.

It was that the corporation
was not going to get involved
in being a supplier for its
operators. My belief was that
I had to help the individual
operator succeed in every
way I could. His success
would insure my success.

But I couldn't do that and,
at the same time, treat him
as a customer. There is a
basic conflict in trying to
treat a man as a partner one
the one hand while selling
him something at a profit on
the other"

"As it turned out, my
instinct helped us avoid
the anti-trust problems
some other franchise
operations got into."

"Grinding it Out"
The Making of McDonald's
By Ray Kroc
Berkley Medallion Books
Copyright 1977

Anonymous said...

The metal fry scoop is better than the plastic one.

Richard Adams said...

Especially the left-handed fry scoop

Anonymous said...

Speaking of McDonald's telling the Operators how to spend their money. The new SLP refund is now part of the Rent and Service Fee Invoice. Instead of the Operators having a little "Pocket Money" from a refund check, the . That equates to about $4,000,000 per month of increased cash flow to the company without a vote or determining how the Operators want to spend "their" money. Go figure. We are from McDonald's and we are here to help you.

Anonymous said...

Not defending the company, but they are reducing our rent each month with the slp(happy meal toys) refund, instead of sending us a check every quarter for the refund. Thus we are now getting our refund monthly instead of quarterly, which appears to be a decrease in company cashflow. However, the company reduces administrative costs by not having to send out checks to each operator quarterly.

Anonymous said...

It's been almost a week since I asked my NLC rep to respond to the following questions: Why is the technology contribution from the company being paid out over 5 years instead of upfront this year as they did with McCafe? This would have substantially and immediately lowered our loan amount and thus our debt service. Was the NLC concerned about a conflict of interest,and was there any discussion or push back, about the acquisition of SEI, et al., by the company shortly after we were required to replace our POS system(there will be an substantial annual, incremental increase in POS fees as a result of this upgrade)? So far, no response from my NLC rep who I know is looking out for our best interests.