February 28, 2014

Is McDonald's Building Too Many New Stores in the USA?

McDonald's Corporation recently filed their annual 10-K report for 2013 disclosing that 
the company opened 225 new restaurants in the United States during the past year and
plans to  open 250 new domestic locations in 2014.

However, the stated total number of restaurants in the USA increased by only 121 stores

due to closings. Two hundred and twenty five new locations sounds excessive in a nation
already saturated with McDonald's stores.

But is 121 too many new openings?

During the years 2005 through 2012 the number of total locations in the USA grew at an

average of 60 stores per year. This must be one of the reasons those were good years, 
there was little cannibalization of the existing restaurant base.

Is it just coincidental that the year McDonald's accelerates that growth is the year same 

store sales increases came to a grinding halt? There are certainly many factors influencing
sales trends and only McDonald's Operators in the field can judge the impact of new store openings.

But we do know one thing, mentioning new store numbers (225 in 2013 and 250 in 2014) 

is an effort to convince shareholders that McDonald's is still a growth company. While McDonald's management often discusses new store growth in other segments of the globe
it's been more than a decade since management has willingly discussed restaurant growth
in the USA.

This is likely a hangover from the disastrous "Convenience Strategy" of the 1990s.


Popeyes CEO: Franchisees Come First


         She tells franchisor convention - NRN reports 

February 24, 2014

McDonald's Eyes Longer Breakfast Hours?

Oak Brook gets asked this question every time a competitor does something
with breakfast and McDonald's executives always give out the wrong answer.

Why can't the response be, "We have the two separate menus and due to the
high volumes of our restaurants we think it's best to focus on doing the best
job possible with each menu segment."
That kind of statement is a positive
without admitting the restaurants can't handle what they already have.

The problem is, there are now so many decision makers at McDonald's who
lack any real restaurant experience (or have forgotten theirs) they don't
understand that McDonald's was never meant to be all things to all people.

The other problem is - when they respond this way to reporters and analysts
and then it doesn't work out - it goes down as a failure on management's part.

McDonald's eyes longer breakfast hours - AP

Taco Bell to Roll Out Breakfast Nationwide


Taco Bell to roll out breakfast nationwide - NRN reports


No Minimum Wage = Low Unemployment

Two Charts on Minimum Wage - From Newt Gingrich


February 20, 2014

The Cost of Higher Wages

Industry leaders express their views:

 “If the entry-level wages go too high,
the experience level, the skill level is 
going to increase for people who are 
going to get those jobs,” he says. “I’m
fearful that teenage unemployment 
will go up even more than it already 
is, that they will price out these entry
level positions for a vast majority of 
the workforce.”

Minimum Wage Hikes Worry Quick Service Operators | QSR magazine


February 19, 2014

Being a Kid at McDonald's

A McDonald's in Peru is encouraging customers to relive their childhood with the
installation of an over sized ordering counter.

QSRweb video is HERE

Panera 2.0

"Panera Bread Co. is making headway 
in its efforts to increase throughput at
its 1,770 units, company executives said Wednesday."

NRN reports HERE

February 18, 2014

Burger King Just Following the Leader

"Big King aside, the chain’s other recent launches seemed shockingly familiar: 
Rib Sandwich is a riff on the McRib, Chipotle Chicken Wrap hit menus as a 
limited-time item around the same time the McWrap became available nationwide.
Not to mention Burger King’s sausage, egg, and cheese breakfast sandwich, which 
was even marketed in ads as a rip-off of the Sausage McMuffin with Egg."

Will Burger King's Menu Revamp Look McFamiliar Again? - Businessweek

Good Deal For Wendy's

The Wendy's Company is making out well on their re-franchising program.
They're not only getting a fairly good price for the stores but also getting 
a $600K remodel commitment from the franchisees.

Another Store Sale For Wendy's - Restaurant-Finance


February 17, 2014

More McCashing In

During the first two weeks of February 2014 McDonald's CEO Don Thompson
sold $415,141 in MCD shares and 10 other officers of the company sold shares
with a combined value of $681,247,

Feel free to check my math HERE


February 15, 2014

Speaking of Treating Customers Differently

Since this is my website I can rant about anything, right? 

Electric vehicle charging stations are becoming more common, that's fine. 
But most of them are installed as close as possible to the entrance to the business.
Why are these customers more important than those of us driving real vehicles? 
Do these people deserve special treatment because they supposedly have a smaller
"carbon footprint"?

These parking spaces look like a good place for my Ford Expedition.

NRN Slaps Down On-Line McDonald's Bashers

In this article by Senior Food Editor Bret Thorn.

Is the Push for Mobile Ordering Kind of Phoney?

I still think that mobile ordering and payment will have minimal impact on QSRs
that already have service problems. This article about Taco Bell's initiative makes
it sound like they've got it all together but the information comes from their
"mobile lead", a person who wants to keep his job.

Check out this misguided strategy:
"If the drive thru line is long, for example, they
can tap “in-store” pickup and go inside. Jenkins said a separate pick up window
for mobile orders will be available to allow those guests to avoid the line."
 (Jeff Jenkins, mobile lead for Taco Bell)

I have two problems with that:

1) If there are lines everywhere maybe they should be working on improving service
    speed and worry about smart phone integration when the operation is improved?

2) Imagine standing in line at a QSR or standing around with your arms folded
    waiting for your food and a guy walks in, goes to a separate pick up window and
    is served instantly! That's demonstrating that one customer is more important
    than another customer and is a really, really bad way to run a business. That
    would my last visit to that QSR.

And get this quote,
“Mobile is the biggest shift in QSR since the drive thru,”
said Jenkins.

Absolute hogwash. But here again, we have someone with zero knowledge about
the restaurant business "reinventing" a brand.

Here's the Nation's Restaurant News article:

Taco Bell to offer mobile ordering nationwide | Technology content from NRN


February 14, 2014

Falling Food Prices Present Opportunities for Operators

"Chicken breast prices are expected to decrease between 5 and 9 percent, according
to the forecast. Pork bellies are predicted to drop 13 percent.....beef, however, won’t 
be affected until mid-2015."

Quick Service Food Supply Costs Forecast to Decrease | QSR magazine

February 13, 2014

Burger King Slowing Pace of Product Launches

 "We have committed to introducing fewer, more impactful products that are operationally simple, that drive sales and traffic, and that add minimal complexity to the kitchen," he said.
For example, Burger King introduced just two new products in Q4 and, in early July, added the spicy original chicken sandwich.

Dunkin' Donuts Introduced 40 new products in 2013

Dunkin's About to Have Operational Problems.

Dunkin' Donuts introduced more than 40 new products in 2013 | QSRweb.com

February 5, 2014

Fast Casual Grows While QSRs Flounder

QSRs won't be able to play in the Fast Casual space as long as things like the  
Dollar Menu hang around.

Burger Business reports HERE

Be Careful With "Transparency"

Since I operated McDonald's stores only a few hours drive from Golden State Foods'
main distribution center I took the opportunity to put together a field trip so my 
managers and assistants could see the where those trucks come from.

As a guy I'd always been impressed with the efficiency and mechanization of the GSF
facility. But, to my surprise, my largely female management team was not very 
impressed. In fact some were a little turned off and even a little grossed out by the 
hamburger patty line.

As we discussed their reaction over lunch, I said, "Come on you guys, this is food and
products you work with everyday". They explained there was noting wrong with the
food but as young moms they didn't' find food on such a large scale as something that
was appealing. Nothing wrong with a box of 10-1 patties but thousands of pounds of 
beef moving down an assembly line? Not so much. 

So, if you're in the restaurant business - as you watch this video from McDonald's of 
Canada - try to look at it as if you only know about the food business from what you 
see at the grocery store. Does that Mom coming in the door with a baby on each hip
really want to see all that ground up chicken breast meat?

                                Where do McNuggets Come From?


Stupid Corporate Tricks

Big companies do funny things. First McDonald's spends millions advertising
espresso drinks only to to boost sales at Starbucks.

Now Coke spends a fortune buying a Superbowl ad that irritates a whole bunch
of Americans sending many people over to Pepsi. 

Maybe having too much money to spend on advertising gives one lousy judgement?

FOX reports HERE

Can China Rescue McDonald's?

Better to build in China vs. cannibalizing the USA

February 3, 2014

We've Never Run A Real Restaurant - So Let's Reinvent McDonald's!

Oak Brooker Kevin Newell recently wrote about the "ongoing evolution
of our menu".

Who are these people who lack any real restaurant experience but
think they are smart enough to remake McDonald's? Maybe it's because
the Wall Street types keep hammering on them for "innovation".

This is the second time in recent history McDonald's has been "evolved"
or "reinvented".

In the early 1990s Jack Greenberg was CFO of McDonald's and moving 
quickly through the ranks. At a series of meetings with Operators around
the country he began his remarks with:

"Those of us who weren't with you at the beginning of McDonald's are
excited to be with you during the reinvention of McDonald's".

Operators in attendance asked each other - why does McDonald's need 
to be reinvented?

Greenberg used this phrasing because he knew he was addressing people
with decades of real restaurant experience while he possessed no such 

McDonald's veterans will remember that the Greenberg "reinvention"
delivered six  of the  worst years in the company's history (so far).

McDonald's is now in the middle of another reinvention. This time the
classic McDonald's system of simplicity, efficiency, and speed is being
completely discarded. 

Will this "evolution" go better than Greenberg's "reinvention"? Early 
results are not encouraging.