Remodels and rebuilds are no longer getting the sales increases necessary to justify the Owner/Operator investment. We are remodeling perfectly good stores and customers don’t see the improvements.
MCD has got to become smarter about the reinvestments required or shall I say being encouraged. It is true that many stores had become "shop worn" dull and uninviting. Remodels, rebuilds and relocations have their place and in some cases are the only effective solution to maintaining strong sales. However, it has become too easy for MCD staff to recommend them as the only solutions. "SALES" is the reason we do anything. Sometimes it seems like the system is agreeable to get a return of one dollar for every thousand dollars spent. The system must stay current with the changing tastes and demands of our customers and with the modern or fresh architecture of the trading area. There is no question about that in my opinion. In many areas of the country we are way behind the curve on both. There is simply no excuse for allowing our food products to fall as they have. When it comes to rebuilds and MRP's better decisions are necessary and costs have got to come down. Both the food issues and construction problems are on the company. It took our competitors to tell us what our customers want. A complacent MCD more concerned with political correctness than customers or cash flow and non assertive operator leadership have nearly brought us to our knees. I'm taking our guys out to St. Joesph, Mo. next week so we can anticipate what will be encouraged next. Again, SALES is our reason to exist.
The problem with rebuilding is that an Operator can't be sure if they are spending the money to increase sales or just to upgrade assets owned by McDonald's Corp and/or assets owned by the Real Estate Investment Trust operated by the McDonald's supplier group.
I believe that it is skewed to increase the value and improve company assets. Sales are many times up but not consistently up. Being up is one thing. Being up enough to get a worth while ROI is another thing. Regardless, of the operator ROI the assets have been improved. The next time they are appraised in Oak Brook value increases and insurance costs are stabilized. The ROI is high for the company because they have little or nothing in it. Respected company Executives should be embarrassed by what they did with the MRP program.
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