There will be an interesting confluence of events over the next few years that could strain
the domestic Operator community.
To a McDonald‘s Operator attending a turnaround summit or worldwide convention it
probably seems like the number of Operators is infinite, but it’s not. And the number of
expandable Operators has been reduced due to financial pressures and will be further
reduced by corporate bullying.
In the near future expandable Operators will be needed for:
* Buying stores from Operators who are being forced out of the system.
* Buying McOpCos as part of the “refranchising” effort.
* Buying stores from Operators who are not being rewritten.
The rewrite issue could be a big deal. McDonald’s veterans will remember an initiative
from the late 1990s called the “Convenience Strategy”. In the 1970s and 1980s McDonald’s USA opened about 300 stores a year. In the early 1990s the number slowed to 160-170 a
year. To impress investors management tried to accelerate the growth of new stores by a
factor of three in years '96, '97, & '98.
Not all of those stores exist today, some were SPODs that have been closed as well as some conventional stores. And some have already been rewritten for other reasons. But, it’s easy
to assume that the number of rewrites up for consideration is going to double or triple in
the last half of this decade.
It’s also easy to assume that, due to expandability issues, there will more than the normal number of rewrite denials. In most cases a pending denial of rewrite causes the Operator to
sell the store before the end of the term (or they sell all of their stores).
And a potential shortage of McDonald's Operators won't be solved by recruiting new
Operators because McDonald's is in the business of reducing the number of Operators,
not adding new people.
There are some multiple Operators reading this and rubbing their hands together thinking “Goody, more stores for me”. Be careful what you wish for because that’s exactly what many Operators did 20 years ago when they heard about the upcoming "Convenience Strategy".