December 26, 2013

Call In Some Grownups

Given the embarrassments of its Twitter and #hashtag campaigns and now the disaster 
of McResources it’s obvious that McDonald’s Corporation should not be allowed to use
the Internet.

McDonald's Drops Employee Website - WSJ.com
.

December 23, 2013

More on McResource Line

This article goes into a little history of the problems with the McResource Line.

McDonald's employee site bashes fast food - NBC News.com


"Although the McResource Line is nominally a site for employees, it is accessible

via a registration process that does not actually verify employee credentials, meaning
anyone can register for it by providing a username and email address and selecting a 
McDonald's region."
.

Look For The Union Label

"We have 70 years of labor law that has developed to make it fair for workers
and for employers, and now you have this new creation that’s exploding, that 
allows them to skirt many of these things,” he says.

Do’s & Don’ts - Franchise Times
.

Posts on McDonald's Employee Site Bashes Fast Food

This employee resource website causes a major embarrassment to McDonald's 
on a weekly basis. If fact, it's a huge resource for unions pushing for an increased 
minimum wage.

McDonald's Operators really should watch this CNBC video.


Oak Brook Damages McDonald's Brand
.

December 18, 2013

Poultry in Motion? - Not So Much

Mighty Wings Saga Leaves McDonald’s With a Frozen Stockpile - WSJ

"Franchisees have been told they must participate in another upcoming promotion – 

the date and pricing of which are not yet clear – or else pay for the excess inventory."
.

December 14, 2013

Not So Fast - In the Digital Age

While waiting for my food at McDonald's I usually fiddle with my smart phone.  With all the noise about digital ordering and payment, during these visits,  I try to imagine what would have been different about my customer experience if I'd ordered and paid with my phone. Would I have gotten in and out more quickly? The answer is usually - not really.

That's because I still have to wait three or four minutes for the food. A faster ordering and payment system would make no difference whatsoever. The credit card processing at McDonald's is so amazingly fast I don't see how one could improve over "instantaneous". Since a smart phone purchase is a debit or credit transaction I'll assume it would go through the same network, increasing the % of sales going out on "plastic", but not be any faster. If it were faster it would have to be measured in milliseconds.

Having said that, McDonald's and every other restaurant must eventually offer this opportunity. If nothing else but for the fun factor of doing things on-line or on a device. Ordering our pizza on Papa John's web site may not necessarily be any more efficient than picking up the phone - it's just more fun.

But, since so many of the decision makers at McDonald's Corporation have never run a restaurant I foresee the following exchange:

* Corporate guys announce new products, more LTOs, customization, and kitchen complexities.

* McDonald's Operators express concerns about the High Density Menu.

* Corporate guys respond, "Smart phone ordering and payments will fix those problems".

* Corporate guys then mumble something about "Millennials" and give out information on
   ordering the next equipment package.

McDonald's appears to be doing a good job of moving the system into the digital arena but it would be a mistake for Operators to rush into all things digital thinking it will solve their restaurant capacity problems in the back of the house.

There used to be an app for that - it was part of the original Plan to Win - called "Simplification".
.

The Minimum Wage and the Rise of the Machines

"the day before Obama called for an increase in the minimum wage, the restaurant chain Applebee’s announced that it will install iPad-like tablets at every table. Chili’s already made this move earlier this year."

Jonah Goldberg - National Review Online
.

December 11, 2013

The "Experts" Have Some Advice for McDonald's

In the mid-1990s, after the dual flops of Arch Deluxe and Campaign 55, reporters  were running around asking "What's wrong with McDonald's". After the Convenience Strategy failed in the late 1990s the same people were asking the same question. And now that sales increases are harder to come by the media is at it again.

And everybody's got an opinion:

Crain's Chicago Business asked five experts but only the last two had useful comments:

Five Ways to Revive McDonald's

And QSR Magazine asks "What's Going On at McDonald's?"

Of course, articles like this never get to any real solutions because they don't interview
McDonald's Operators.

This is an interesting quote from analyst John Gordon, "But McDonald’s may be 
approaching a point of … reaching our approximate sales plateaus. If you’re looking
at $2.6 million in terms of U.S. AUVs, McDonald’s is up nicely, but how much higher 
can it go practically in a nation with a million restaurants?”
.

December 6, 2013

Oak Brook Gives Itself Another Black Eye

McDonald's Operators have expressed concerns over negative publicity about the 
system over the past year. Some of that negativity is naturally going to come to 
a company that has a near decade of success and then hits a plateau. However, 
much of the news that makes Operators cringe is generated from idiotic moves by 
McDonald's management. Such as the following:

McDonald's gives workers advice on tipping au pairs, trainers, dog-walkers - NBC News.com
.

December 4, 2013

Democrats Urge McDonald’s to Raise Wages

We can't expect that these lefties would understand any business issues, let alone 
the fairly complex franchise relationship. But it's still stunning that they think the
CEO of a franchise chain can dictate pay rates.

However, McDonald's management continues to tell investors that corporate 
determines menu prices for franchisees so maybe it's easy to believe they also 
control labor costs.

Democrats Urge McDonald’s to Raise Store Workers’ Wages - Bloomberg:
.

December 2, 2013


.

Olive Garden to Feature Burgers

Peter Saleh, a New York-based analyst at Telsey Advisory Group says 
“It would be the same as McDonald’s trying to do some sort of pasta meal.”

Please, Mr. Saleh, don't give McDonald's management any ideas!

Bloomberg Reports
.

Steak 'n Shake Franchisees Bite Back Over $4 Menu

“Steak n Shake effectively controls both the buy and sell prices for every food item 
sold by franchisees,” Scott’s said in its lawsuit. As a result, it said, “Lower menu prices 
would mean financial disaster for many franchisees.”

Steak n Shake franchisees bite back over $4 menu
.

Did Somebody Say McCopycat?


I've figured out Oak Brook's dastardly plan - cause the competition to imitate McDonald's
by complicating their menus until operations break down. McDonald's will then simplify 
the menu, improve speed of service, and leave the competition struggling to be all things 
to all people.

AdAge Reports
.

Has Time Run Out for McDonald's Brand Chronicle?

This column is an example of advertising people over-intellectualizing things trying to 
make themselves sound smart. But the writer ends with the point, "It's hard to make 
a point when your ads are all over the map".

Isn't that because the McDonald's menu is all over the map?

Has Time Run Out for McDonald's Brand Chronicle? - Advertising Age
.

November 27, 2013

The Mythology of the Minimum Wage - Opinion

"As it turns out, increasing the minimum wage actually hurts the working
poor, is a windfall for affluent families, and raises the barriers facing the 
unemployed. There is growing evidence that increasing the minimum wage 
hampers employment for low-skilled workers who need the most help and 
experience."

The Mythology of the Minimum Wage | Douglas Holtz-Eakin
.

November 21, 2013

Restaurant Finance Monitor on McDonald's Speed Problem

McDonald's Wants To Fix Its Speed Problem
.

Thompson - McDonald’s Is ’Nowhere Near’ Saturation

McDonald’s CEO: Company Is ’Nowhere Near’ Saturation - Bloomberg
.

Restaurant Chains Look to Streamline Menus

“Simplicity is the key to success in the foodservice industry,” said Gary 
Stibel, of The New England Consulting Group, “Doing a few things 
extraordinarily well” — that is, efficiently and at a reasonable price while 
still making a profit — is at the heart of running a good restaurant, he said.

Restaurant chains look to gain by streamlining menus -NRN
.

Carl's Jr. parent CKE to be Sold



Every time these chains change hands it sets them back a few steps.

Carl's Jr. parent CKE to be sold to Cinnabon owner Roark Capital
.

Is Speed of Service a Priority for McDonald's in 2014?

Speed of service a priority for McDonald's in 2014 | QSRweb.com
.

November 14, 2013

McDonald's Eyes Bigger Share of Coffee Market

The company, based in Oak Brook, Ill., also recently said it's partnering with Kraft Foods
Group Inc. to sell McCafe bagged coffee at supermarkets in test markets. The company is 
hoping the move will help build awareness of the MCafe brand. "It's about selling more 
coffee in restaurants," (Kevin) Newell said of the Kraft partnership.

And Redbox was supposed to build customer traffic.

McDonald's Eyes Bigger Share of Coffee Market - ABC News
.

From McDonald's Investor Meeting

Execs with McDonald's (MCD -0.6%) are giving some glimpses on where the company might find growth in the future.
  • Potential initiatives include kiosks in grocery stores, an intensified push into premium beverages, and an expansion of breakfast items in global markets where early-day sales lag.
  • The company will also invest more in its kitchens which could lead to larger grills areas and open up the possibility of all-day breakfast offerings.
  • In emerging markets, McDonald's say franchising and real estate strategies will align with local dynamics.
From Seeking Alpha
.

Investor Day in Oak Brook

"Our goal is to ensure that we are adapting to keep pace with the changing marketplace," Don Thompson continued.  "We are intent on strengthening our brand by running even better restaurants and delivering the best food and beverage offerings."

McDonald's Continues To Invest For Future Growth - Yahoo Finance
.

November 8, 2013

Wisdom From 2003

Jim Cantalupo became Chairman and CEO at the beginning of 2003 and
had this to say in the opening paragraphs of the 2003 Annual Report:

"As you will recall, our business was in serious need of improvement
when I became chairman and CEO at the beginning of 2003, I said back
then that we had taken our eyes off our fries, and we paid a price.

Our performance had disappointed our customers, our shareholders and
ourselves. We know we had a lot of work to do to right McDonald's ship
and rebuild our foundation to support future growth."

Ten and one-half years later can't the same thing be said about McDonald's
today? Isn't expanding the menu exponentially and making the restaurant
operation insanely complex also taking your eyes off your fries?

The 2003 annual report also makes this statement:

"In the long run, only exceptional service will truly differentiate
McDonald’s from the competition. So we are making a concerted effort to
improve the friendliness, speed and accuracy of our service. We improved
our drive-thru service times in the U.S. last year, but  we’re committed
to doing even better.

We’re simplifying our restaurant operations. We’re using more visual menu
boards to make ordering easier for customers. We’re also eliminating some
sizes and slow-selling items and better organizing the kitchen, front
counter and drive-thru areas to improve efficiency."

Wow, what a difference a decade makes!
.

November 4, 2013

BK To Introduce 'Fewer, More Impactful' Menu Items

"The strategy would ensure franchisees could execute the menu items easily and profitably and that Burger King could support it with stronger marketing campaigns."

NRN Reports
.

November 1, 2013

Do You Know the Way to McCafe?

When I heard about Operator "Leadership" discussing the support of a new coffee initiative
I thought it was a joke or that I was being misinformed.

Then, Don Thompson mentioned coffee in his remarks on last week's analyst conference 
call. Then, this week it was announced that a McCafe line would be tested in supermarkets.

It's doubtful we're only talking about drip coffee here and likely much of this is about espresso based drinks.

McDonald's Operators are busy and the years go by quickly so we'll review the damage done
by the disastrous launch of espresso drinks in 2009. The year was going along pretty well until McDonald's Operators began spending millions advertising espresso drinks - America yawned. This took advertising support away from the core menu and other new product introductions. Sales suffered and did not rebound until the introduction of iced drinks in the spring of 2010. 

Please refer to the chart at the bottom of this post.

If this is another effort against espresso drinks it's coming at an awkward time as the overall sales improvements from 2003 to 2012 masked the failure of espresso drinks. There is no such momentum currently in the USA. This is a dangerous time to waste more advertising and system resources on a failed product line.

As for McCafe in supermarkets - after McDonald's Operators have spent many millions supporting the McCafe brand - the benefit of supermarket sales will go to McDonald's Corp. Kraft, and the supermarkets? Where do Operators go to get paid for trying to build the 
McCafe brand?

Yes, McDonald's management will blather about "brand extension" benefiting the Operators
but that never seems to work out the way it's promised.

If this is about spending more money on espresso then it is a continuation of Oak Brook's
obsession with Starbucks and their efforts to be more than "Hamburger Guys".

If OPNAD votes to spend more on espresso then it's time to consider shutting down this
voluntary ad fund.




Click on chart to enlarge

.

October 29, 2013

McDonald's, KFC Rank High on Brand Simplicity Index ?


This study seems to be flawed. Yes, customers like simplicity. The QSR industry was built on that premise. 

But it appears the people who wrote this study failed to do any field work. They've obviously never tried to read a McDonald's drive-thru menu board.

McDonald's, KFC rank high on Global Brand Simplicity Index - NRN
.

Restaurant Advertising Falls Short

Restaurant advertising falls short of being memorable, relatable | QSRweb.com
.

Forty-Three Day McDonald's Rebuild!

McDonald's Of Bridgeport Sets Records: 43-Day Construction and $100 Big Macs
.
.

A Revolt at One of the Smaller Chains




Dissatisfied Franchisees Spark Ouster of Mooyah CEO

Analysts Debate...

McDonald's or Burger King?
.

Tim Horton's Continues to Dominate the Great White North

Coffee War Heats Up in Canada
.

October 27, 2013

Restuarant Executive Admits Operations Are Too Complex

Chief Executive Ron Shaich said the chain (Panera) is experiencing "operational friction" that is limiting its ability to squeeze out higher sales.
"We are taking a number of deliberate steps to improve our operational capabilities and our competitive position,"
"we're looking at opportunities to reduce complexity in our production system and in our cafes."

Panera Bread sales at its own stores disappoint; stock falls | Reuters
.

October 18, 2013

McDonald's Needs MORE Innovation?

McDonald's Operators won't like this WSJ article but I'm posting it in hopes of generating 
some communications between a particular Wall Street analyst and a few outspoken people in the Operator community.

Michael Kelter at Goldman Sachs continues to criticize McDonald's for not having enough 
"innovation". This during a period when McDonald's USA is launching a new product or an
LTO every 60 days!

I'm suggesting that a few McDonald's Operators reach out to Michael and explain to him 
what innovation is doing to the capacity of the McDonald's restaurant operation.

Analysts are always eager to communicate with McDonald's Operators. Confidentiality?
there is no conceivable reason why an analyst would reveal the identity of one of their 
sources. They'll want to keep the communications flowing over time. I just wouldn't use 
the Oak Brook E-mail system.

Michael's E-mail is:  Michael.Kelter@gs.com


Here's the Wall Street Journal article


Some of his previous comments

.

Food Advocates, McDonald's Clarify Happy Meals' Soda Policy

The Goal of the Center for Science in the Public Interest is to put companies like McDonald's out of business:
.

October 10, 2013

Why Chick-fil-A Just Works

"Chick-fil-A is a contrast to the current QSR strategy that involves broader menus and more complex operations. Chick-fil-A's unit volumes exceed $3 million. That's the highest average of any limited-service chain out there. It's higher than Chipotle, it's higher than Panera Bread and, yes, it's higher than McDonald's. Indeed, Chick-fil-A does those unit volumes with half the menu of your typical Golden Arches and it's not open Sundays or holidays."

Why Chick-fil-A Just Works - Restaurant Industry Insight, News and Analysis
.

October 9, 2013

More Turmoil at Burger King

"The current changes put control of the company into the hands of a group of young executives, led by Schwartz, who was 32 when he was promoted to CEO this year. "It's just a bunch of young guys over there now," one franchisee said."

Burger King Loses A Key Executive - Restaurant Industry Insight
.

September 29, 2013

Make My Mighty Wings Sauceless



I'm not the only one who thinks McDonald's menu is ridiculously complex.

First of all, I love the new Mighty Wings and have eaten them three or four times a week since the introduction. They taste good enough to eat without the dipping sauces so I ignored that issue until I read in a press article that Mighty Wings come with "a choice 9 dipping sauces". At first I thought that was a typo or bad reporting but it turns out to be true.

So when a crew person asks me what kind of sauce I want I ask (like millions of others) "What do you have?". The list is so long most crew people have to take a breath part way through. 

Yesterday I went inside a McDonald's to order and an affable collage age man took my order. I again asked my sauce question and even using the POS screen as a guide he got confused, shook his head, and said "We have too many dipping sauces".

This twenty something gentleman knows more about what's going on in a real McDonald's restaurant than anyone at Oak Brook headquarters.
.

Simplification is So 2004!

It's very encouraging to hear that recent McDonald's Operator Pulse Surveys included Operator concerns about the growing complexity of the McDonald's restaurant operation and that Operators feel the regional staffs are "disconnected" from the restaurants.

It seems like yesterday that one of the components of the original Plan to Win was "Simplification". That was back when the McDonald's menu was about one-half the size it is today.

I don't know if a conscious decision to expand the menu exponentially was made at some point in time or the menu just evolved from a lack of discipline. McDonald's decision makers appear to believe that efficient operations are old hat and McDonald's restaurants must now be All Things to All People.

But don't the long-time operations people in McDonald's upper management know what they are doing to the capacity of the restaurants and the effectiveness of the people running the restaurants?

They might, but there are now so many Oak Brook decision makers who have no real restaurant experience that the people with real operations knowledge must get drowned by the new product pipeline and ignored. Or they may be told (by non-ops people) they are becoming obsolete and don't understand the realities of today's marketplace. That would be pretty intimidating.

In many ways McDonald's veterans have been to  this movie before.

In the late 1990s McDonald's USA was on the ropes and Jack Greenberg staked the system's future on the Made For You cooking system. While millions of customers refused to wait in the long lines created by MFY no one would tell Jack Greenberg they'd created a huge problem. McDonald's USA went through another four years of sales problems and Operator failures.

At that time Greenberg was one of the few decision makers in McDonald's USA who didn't have decades of real restaurant experience. Because he lacked that operational background Greenberg apparently refused to listen to those who had such experience (or they were afraid to speak up).

Today, according to the corporate bios, there are only a couple of people on McDonald's upper management team who've ever run a real McDonald's restaurant. In addition there are the corporate marketing people running OPNAD who live in their own fantasy world and will never understand operations.

The danger is that these non-operations people are under intense pressure from Wall Street analysts who expect constant "Innovation". These analysts know McDonald's by the numbers but have no idea what they're seeing if they ever visit a McDonald's restaurant. I've been working with the analysts for more than 15 years and I know that they'll keep pushing for "Innovation" until McDonald's menu is the size of a Denny's menu.

And, while not as influential, the press is constantly hassling Oak Brook for "New Product News". The corporate PR people know that the easiest way to get a positive headline is to announce a new product line.

So who's going to tell the decision makers with no real restaurant experience about the damage they are doing to the growth prospects of McDonald's USA? It won't be anyone working in Oak Brook. Their career path will grind to a halt if they admit to their bosses that McDonald's can't be All Thing to All People.

It will have to be McDonald's Operators who stop the insanity through Co-Op and OPNAD decisions, surveys, public comments, and other activism. It's a long road back to a sensible menu and a workable kitchen system - only McDonald's Operators know the way.
.

September 26, 2013

McDonald's VIPs - Fancy Food - Celebrity Chefs

In June I was quoted in Businessweek saying,  
“McDonald’s management, once they get to a certain level—I think it’s when they get a limousine — they no longer want to be hamburger guys. They want to be restaurateurs.”

This event proves my thesis:

McDonald's tries fancy food with celebrity chefs in NYC
.

Former McDonald's Executive Lists Mansion



It might seem like we're picking on Ralph Alvarez but he keeps showing
up in the news. He's asking $5.25 million for his Chicagoland house.

Former McDonald's executive lists Hinsdale mansion - Crain's Chicago Business:
.

September 16, 2013

September 13, 2013

McDonald's Suits on Tour

McDonald's executives presented at the Goldman Sachs Retailing
Conference this week and continued to tell investors that Operator
pricing decisions are made in Oak Brook. Analysts are a little frust -
rated at this since menu price increases boost corporate earnings. 

Management says they will stay the course.

This is why we continue to hear about regional staff bullying Operators
and deeming them "not expandable / not rewriteable” even taking
new stores away from them for being outspoken against continuing
all coffee for $1, all drinks for a $1 and discount price pointing in the 
local co-ops. They are apparently using such Operators as a warning
to others to go along with what the corporation wants.  

Playback of the conference is HERE
.

September 12, 2013

California Lawmakers Pass Minimum Wage Increase to $10

California Lawmakers Pass Minimum Wage Increase to $10 an Hour - Bloomberg
.

McDonald's Higher-Price-Point Value Menu Could Be A Win



"Leslie Kerr says catering to the most price-sensitive guests can be 
both difficult and dangerous for a brand. “At some point, operators
need to ask themselves if a dollar is realistic,” she says. “Consumers
realize that prices increase, and holding on to the dollar market is 
not good business. It just doesn’t make sense.”

McDonald's Operators should bring in Ms. Kerr to speak at the next
OPNAD meeting.

McDonald's Higher-Price-Point Value Menu Could Be A Win - QSR mag
.

Former McDonald's Senior Director Joins OSI

It's very clever. When McDonald's Corporation wants to downsize or 
retire someone they just move them over to a supplier and let the
McDonald's Operators pay their ongoing salaries.

Former McDonald's Senior Director Joins Key Supplier - QSR magazine
.

September 9, 2013

Price Wars - Franchise Times

We've posted news about the pricing dispute at two Steak n' Shakes
in Denver. This article discusses the situation but also does a great
job of laying out the legal history of franchisor price fixing. 

Price Wars - Franchise Times - September 2013 - FranchiseTimes.com
.

September 4, 2013

August 30, 2013

Is There Such a Thing as a Bad Customer?

While I'm the first to gripe about imperfect service this writer makes
the point that some people just can't be satisfied. And, as quick service
restaurants expand their menus and try to be "all things to all people" the customer base will get pickier and pickier and pickier.

Maybe you get bad customer service because you’re a bad customer?
.

Chains Out of the Fray

It's smart for these companies to just issue generic statements and little
else. Most of those doing the reporting would side with the unions.

Fast-Food Chains Under Fire For Low Wages Stay Out of Fray - Ad Age


August 27, 2013

August 26, 2013

The Problem With Mighty Wings

"By adding chicken wings, McDonald's is adding yet another 
product, however temporary, to what is already the most 
operationally challenging concept in the QSR business." 

Opinion from Restaurant Finance Monitor
.

August 24, 2013

SEIU’s Fast Food Abomination

Restaurant Operators who are sick of the positive coverage unions
are getting in the minimum wage controversy might enjoy this
blogger's comments. She says she grew up in a family pizza business.

Occupy Big Mac: SEIU’s fast food abomination – Flyover Culture
.

August 20, 2013

Nothing to See Here! Part Two

We mentioned the recent Nation's Restaurant News article. It's
available if one registers an e-mail address on the NRN website.
It's quick and easy and worth it to see the comments from Jim
Johanessen. And, an "expert" is quoted as saying McDonald's
Operators can just say, "Here are the keys, I'm out".

It's more like McDonald's lawyers like Johanessen show up at
the door saying "Give us the keys, you're out".


Just go to the bottom of the page and click on "register".

McDonald's franchisees not leaving brand despite tension - NRN
.

Psychedelic Big Mac Ad


Could Be a Scene From the 
Yellow Submarine

Click HERE to play video

August 17, 2013

Customers Care About Value Over Price

Darren Tristano, executive vice president at Technomic ...“Prices have
to go up,” he says. “You can’t just keep shrinking the items down or 
keeping product as loss leaders for chains.”

Fast Food Customers Care About Value Over Price | QSR magazine
.