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 

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 |

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