June 7, 2014

Comment of the Week

"In the May 26 issue of Nations Restaurant News, an article titled "Course Adjustment" quotes Don Thompson stating that the 2014 plan (and beyond)is all about increasing TOP LINE SALES and transactions, and NOT driven "based on optimizing profitability".

In other words folks, We are on our own. Thompson could not care less about our profitability, or the effects of Obamacare, minimum wage hikes, Unionization, or rising commodity costs !"


Posted on:

Thompson: "Increase in Minimum Wage OK With Me"

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5 comments:

Anonymous said...

BRAVO !!!
Now when will Wall Street realize that the majority of operators have registered a vote of "No Confidence" in Thompson, and demand his removal?
Until that happens, and he is repalaced with a CEO that realizes that OPERATORS run 85% plus of the stores, we are DOOMED . SELL YOUR STOCK NOW AT ITS PEAK !!!

Remember Mcd @ $13 per share??

Anonymous said...

The way for Oak Brook to fix the culture of dissatisfaction among owners (which will help customer satisfaction and operational efficiency) is for them to focus on menu simplification and food integrity. Instead of nibbling away at the margins of these issues,(recent NLC reports the elimination of only 3-5 menu items), trying to be all things to all people, and announcing share buybacks and McOpCo store sales for a short-term boost, MCD needs to take drastic action on these core strategic issues.

For investors, the key to the long-term performance of MCD shares is these three linked "meat and potato" operational issues: menu complexity, food integrity, and franchisee tension. Until Oak Brook comes up with a plan that jointly addresses these, expect MCD's share price to languish.Thompson just doesnt "get it"

Anonymous said...

You can find evidence of growing animosity between MCD corporate and franchisees in many ways. Evidence for a fraying rapport between franchisees and MCD corporate may be no further away than your local McDonald's. There, you might see or experience things backed up in wider surveys :

Increasing waiting times in store - According to the WSJ,( in a recent webcast to franchisees), one slide said that complaints about speed of service "have increased significantly over the past six months." Another slide said that customers find service "chaotic." Another boldly stated "Service is broken." We all know Menu complexity has caused this.
Increasing waiting times at the drive through - A survey by QSR Magazine recently observed that McDonald's recorded its slowest drive-through time in 15 years. In their annual Drive-Thru Study, QSR magazine's comparison of customer service at fast-food chains, average service time at McDonald's drive-through was 188.83 seconds, compared with 129.75 for Wendy's , the industry leader.( yet Oak Brook demands 60-90 second service!!)
Less friendly staff - In another recent survey, Chick-fil-A had the top friendliness ratings among QSRs. Of the seven major chains considered, McDonald's was second to last in the "very friendly" ranking, just above Burger King . According Bloomberg, in a recent Oak Brook-Owner webcast, 20% of customer complaints concerned staff friendliness (or lack thereof).

In short, McDonald's is running out of the special sauce needed to make the brand work in the long run - a culture of quality service. A big reason this is happening because MCD's spoiling relationship with us, its franchisees. Thompson must have a huge attitude adjustment or be replaced. The sooner the better

Anonymous said...

MCD Corporate:

Won't budge on rent when renewing leases, which have departed too far from the historic average of 8%(13-16% is common)
Require franchisees to run promotions like free coffee for several weeks to fight off competition in breakfast(highly unprofitable)
Expand the "Dollar Menu & More", and then spend funds advertising it: this drives gross sales, but hurts our margins because people then don't buy more expensive sandwiches
Require upgrades to equipment like new HDK prep tables and McCafe that both cost money , plus downtime; these new prep tables are largely to accommodate Oak Brook's new menu customization scheme (more expanding menus!)
Mandate physical restaurant "reimaging," to THEIR BUILDING, which are both insufficiently flexible, and is being driven on timetable dictated from Oak Brook - to be completed by the end of 2016 - that is too fast
Crack the whip on service quality and friendliness, which drive up staffing and training costs

In short, there is a culture problem between MCD and its owner operators brewing.A franchisee recently told Bloomberg: "What I see going wrong is the corporation itself is forgetting that its fiscal strength rides on the fiscal strength and the creativity of the operators, and it's just going for such centralized control." A survey conducted by McDonald's itself in March resulted in franchisees ranking their relationship with Oak Brook as a 1.73 on a scale of 1 to 5 (with 1 being poor, and 5 being excellent). At the end of 2013, the same survey had produced the lowest result ever, with franchisee satisfaction dipping to 1.7. Don Thompson is the WORST McD leader in at least 30 years.

Anonymous said...

Thompson is riding his high salary and is vision blocked to view an Operator's complexity in the restaurants. Top line sales and Guest Counts is the only straw that will feed his horse.

He needs to de-saddle and see all the other horses living in the pasture.

Less cars coming through our DT's means less money in our tills every hour. 90 second service times in drive thru are gazing in the field.