December 27, 2017

Restaurant Rookies

Franchisees ask, "How can a person with no real restaurant experience or knowledge
end up in a high level position at a major restaurant chain?"

In a word - "HYPE"

In the following Bloomberg article the writers speculate on four people who may be candidates as the new CEO at Chipotle. Three of those mentioned are restaurant vets,

the fourth is a McDonald's VP named Lucy Brady. She's been with McDonald's for 15 
months and it's her first job in the restaurant industry. The ink on her new business 
cards is barely dry and some are discussing her ascension to restaurant CEO. 

Now these business reporters are not decision makers but the "HYPE" has begun. 

Stranger things have happened - after all, look who's President of McDonald's USA!

Chipotle Seeks a New CEO Who Can Restore Buzz for a Damaged Brand - Bloomberg

Fast Food War - Going to Have Many Casualties

Del Taco has 550 stores in 15 states.

Fast food war: Del Taco challenges cheap eats offered by McDonald’s

December 26, 2017

December 20, 2017

From Delivery Article Referenced in Previous Post

A quote from Chris Cheek, the CEO of the 115-unit fast-casual chain Newk’s Eatery.

Others, however, say consumers give chains a break when it comes to quality because 
they know it takes time between when it’s made and when it arrives at the house — 
they’re more concerned about convenience.
“Consumers give you a little bit of leeway,” Cheek said. “They’re OK with that for the convenience. A lot of us in the industry have to accept that first. That doesn't mean you 
don’t do it. Our customer is telling us to do it.”

Consumers will give up quality for convenience? This is officially the second dumbest 
thing ever uttered by a restaurant executive.

The dumbest thing ever said by restaurant executives? That was in the year 2000 when 
the introduction of the Made For You cooking system in McDonald's USA destroyed service
times and customers were turned away by the millions. The response from Oak Brook?

"Customers don't mind waiting a little longer if they know it's made just for them."

Meanwhile sales cratered and the Dollar Menu was launched in late 2002 to cover up management's mistake.

Will the same thing happen with Hot Off The Grill? 

Could be - there's a frighting similarity. Back in the days of MFY McDonald's was also 
being run by accountants with no real restaurant experience.

Companies Go Slow On Delivery

Texas Roadhouse CEO Kent Taylor - “We encourage all of our competitors to do as 
much delivery as they can so they can deliver lukewarm food to the people who order it,”

Why some companies go slow on delivery

December 19, 2017

Analysts on McDonald's New Dollar Menu

"Analysts say the new Dollar Menu could spell disaster for fast-food rivals like Wendy's, 
Jack in the Box, and Burger King." 

McDonald's new Dollar Menu - Business Insider

December 16, 2017

Keeping It The McFamily

Long time McDonald's executive to serve on GSF BOD

More on Subway

Financial writer Jonathan Maze has moved from NRN to Restaurant Business Magazine.
He's a pleasure to work with because he truly understands restaurant profitability.

Subway's AUV is only $420K! How can they make any money at that volume, let alone
do any discounting?

Subway franchisees push back against new Footlong deal

December 14, 2017

U.S.NLRB Joint Employment Ruling Overturned

The election of Donald J. Trump likely saved the McDonald's franchise system from destruction by unions and government. And yet, according to social media 
posts, the pajama boy who is currently president of McDonald's USA hates the 
President with a passion. 

I guess that's what happens when you've never actually run a business and don't 
understand free-enterprise.

U.S. labor board overturns Obama-era 'joint employment' ruling

Phony Movie Maker Admits to Sexual Abuse

Who could have guessed that he's a dysfunctional human being?

'Super Size Me’ director confesses sexual misdeeds - WaPo

Erasing McDonald's History - Part Five

An exterior remodel will probably eliminate the arches.

Rock 'n' Roll McDonald's to close for remodeling, ditch rock theme - ChiTrib


Subway: Franchisees Are Revolting

"Subway this month has been calling regional town hall meetings with franchisees,
trying to convince them that discounts will prop up profits instead of pinching them."

Struggling Subway is now facing a franchisee revolt

December 13, 2017

Now McDelivery Makes Sense...

It's been hard to get our brains around the McDelivery program but it makes more sense
if we consider this initiative works in a McDonald's USA with fewer and fewer McOpCos.

For decades McOpCo profits were an important factor in McDonald's corporate earnings.
This brought a little balance to promotions and initiatives. McDonald's Corp. had skin in 
the game. If an idea was bad for profits it wouldn't make it through the filters because it
would hurt McOpCo as much as the Operators.

Without a large McOpCo base McDonald's Corp. must depend on rents and royalties for
nearly all of their income. And the only way earnings will grow is through ever increasing 
same store sales.

It's likely that in the future McDonald's Operators will be confronted with many promotions and initiatives that only build sales and would have never seen daylight ten years ago.

December 9, 2017

Advertising McDelivery - Already?

Unless you were out of the country or in solitary confinement you saw a flood of McRib
commercials in November. While the commercial itself is fine, especially if you're trying
to introduce a younger generation to the McRib, isn't it too early be advertising delivery?
Even subtlety?.

McDonald's USA is a long way from having a predominance of customers able to access
McDelivery. As I understand it, some stores and some Operators will never be on 

Yet the concept of delivery is already on OPNAD?

We've been here before. Oak Brook forced OPNAD to launch McCafe espresso drinks 
in the spring of 2009, a silly season to introduce cold weather drinks. Worse than that - 
about one third of McDonald's USA stores didn't have the product. Management had so
over-hyped the new product line to Wall Street that there was no way they could wait 
until fall to launch McCafe.

So OPNAD went full steam into McCafe espresso, wasting millions in Operator ad $$$.
Same store sales went flat because A) OPNAD was advertising something that wasn't in
all restaurants,  B) Americans weren't interested in hot drinks in the summertime.

But this illustrates that OPNAD has two jobs, driving customers to McDonald's and also making an impression on McDonald's investors. It works like this - management jumps 
the gun and tells Wall Street about the next few initiatives or promotions.  Sometimes 
this happens a year out, more often about six months. Along the way management will 
tell media and analysts that 90 percent of McDonald's Operators support the program. 

Then, after analysts and investors have seen hundreds of commercials on the subject management can conduct a quarterly conference call and tell them the campaign was
a huge success. Of course their audience believes it after seeing all those commercials!

Can McDonald's Operators stop OPNAD from prematurely advertising McDelivery?

December 5, 2017

Survey Answers Some Key Third-party Delivery Questions

This survey contains some interesting data but also some spin. I direct your attention to:

* Ticket prices are impressive and the managements of the restaurant companies with 
delivery claim that the typical order amount is 2/3/4 times the restaurant's average check. 
Of course it is. What customer is going to spend $5.00 to have a $7.00 order delivered? It's 
either a group order or a person stocking up on that restaurant's food.

* These same managements claim that the bulk of delivery is incremental. They have to say 
that because analysts are expecting same store sales increases. In fact the last quote in this 
article is, "We consistently hear 70 to 80 percent range (incremental sales) from folks that
we partner with".

And yeah, he works for Uber.

Survey sponsored by Franchise Times Magazine

December 4, 2017

Press Coverage of New Dollar Menu

Today was a real Deja Vu day. Spent the afternoon explaining the Dollar Menu to a 
new batch of reporters. It was 2002 all over again.

McDonald's to launch a new Dollar Menu next month in 'value wars 2.0' - ChiTrib

December 2, 2017

Cheap Building, No Matter Where It's Located

Muleshoe TX is SW of Amarillo

$49,900 for McDonald's building

What Has Happened To The McDonald's Supply Chain?

Running out of chicken tenders?

A major bakery employs illegals as one third of their workforce?

The UK has run out of pork products?

McDonald's has run out of bacon for its egg Mcmuffins - The Independent

My first reaction to these screw-ups was that they must have a bunch of newbies
running the supply chain. However, the two women running the global and USA
supply chains have each been in that end of the McDonald's business for nearly 
30 years.

The problem must be in the direction coming from the know-nothings upstairs.

November 29, 2017

Chipotle Seeks CEO Successor

Sad that a major restaurant chain has no bench and has to go outside for a new, inexperienced  CEO - Wait - McDonald's USA did that very thing only one year ago - 
Never mind.

Chipotle seeks CEO successor with turnaround expertise - NRN

November 21, 2017

Uber Drivers Are Good People - With Long Rap Sheets

And you're going to let these people handle your customer's food?

"Taxi drivers, by comparison, are subject to fingerprint background checks by the FBI and Colorado Bureau of Investigation. Elsewhere in the U.S., Uber and Lyft have threatened to leave places that force them to fingerprint drivers — including in Chicago, Maryland and Houston."

Uber fined $8.9 million for allowing drivers with felony convictions, other license issues

It Seems Folks In Des Plaines Care About McDonald's Museum - More Than McDonald's

Outcry over McDonald's plans to tear down Des Plaines replica

November 20, 2017

Chipotle's Food Safety Problems Persist

While none of us feels sorry for Chipotle the website mentioned in this article is a danger 
to all restaurants. Anyone can make any fake claim about any food related issue, do it 
multiple times, and do it anonymously.


Chipotle's food safety problems are persisting - Business Insider

Erasing McHistory

For those McDonald's Operators who believe the new management team is trying do away with all McDonald's heritage, here's more evidence.

Apparently McDonald's history began with the British invasion.

McDonald’s plans to tear down Des Plaines museum - ChiTrib

November 19, 2017

McDonald's Presents at Morgan Stanley Conference

McDonald's Corp's Chief Financial Officer recently presented at a Morgan Stanley conference. The analyst questions are always interesting and it's fun to see the CFO pretend he knows what's going on in the restaurants.

McDonald's (MCD) Presents at Morgan Stanley Global Consumer & Retail Conference (Transcript) | Seeking Alpha

I try to stay away from internet slide shows because they are usually just click bait. But this
one is reporter Peter Romeo's take on the CFO's presentation. Pete's been covering the restaurant industry for more than 30 years

McDonald's tells all - Restaurant Business magazine

It's Official, McDonald's IS Running Out of People

Here they're looking for a business consultant in Portland, OR - LinkedIn

November 15, 2017

Franchise Times onThird-Party Delivery

Franchise Times magazine just wrapped their Restaurant Finance Conference in Las Vegas
and reporter Thomas Kaiser covers the discussion on delivery.

Third-Party Delivery No Longer Optional -

Click to enlarge


Revenue Management Solutions Goes Rogue

Number Two of the Five - "More business isn't better if it doesn't make you money".

Apparently RMS didn't get the McMemo.

5 things to consider before partnering with a third-party delivery provider - RMS

November 13, 2017

Next Remodel Initiative - After EOTF

Click to enlarge

As long as they can force their 
tenant to pay for rebuilds - 
sky's the limit.

World’s fanciest McDonald’s is full of leather, gold and marble - NY Post

Feel Free To Check My McDelivery Math...

And to comment on my assumptions.

I'm sure many McDonald's Operators have discussed the following in meetings but since I don't attend those meetings I'll contribute here. 

Assumptions: The delivery service charges something like 15% commission (paid by the McDonald's Operator) and McDonald's Corp. charges the Operator full rent and service fees on 100% of the retail value of the order. 

Let's say a store is paying 10% rent and 4% service fees. The store gets a delivery order that totals $20.00. Rent/Serv. Fees are $2.80 to McDonald's (14% X $20.00). The delivery service sends the Operator 85% of $20.00, or $17.00.

In this example effective rent and royalties on the transaction are 16.5% ($2.80/$17.00), 
2.5% over the 14% paid on in-house sales.

So the operator is paying a total of 17.5% (15% commission + 2.5% increased McD fees) on 
all delivery orders. With higher rent stores that 17.5% becomes 18%, 19%, 20% and beyond.

Why would anyone do that?

November 11, 2017

Uber EATS Operator Profits

Regarding McDelivery profitability - this is what McDonald's CEO told investors on the October 24 conference call:
Analyst question from Sanford C. Bernstein & Co.
So in terms of delivery, do you now have a large enough sample to draw some conclusions about the impact on comps? And also, can you talk a little bit about profitability? One of the things we hear from some of the private companies we speak to is that it's difficult to make delivery profitable even when it's outsourced to third parties and, therefore, doesn't require as much in upfront investments. Could you talk a little bit about what kinds of fixed and variable costs your franchisees incur and what kind of profitability you anticipate? Thank you.
McDonald's Corp. CEO responds
Right. I'll have a stab at that one. So I mean, clearly, we're getting enough of an early read to be encouraged by delivery. So we've pursued – delivery have pursued a very aggressive rollout program. And our primary lead partner on this one has been UberEATS. And effectively, we've looked to expand wherever UberEATS has coverage around the world. And they've actually been doubling-down on their expansion to help meet our ambition as well, so it's been working well as a partnership between the two of us. And yes, we're getting good early trading results.
What we are finding is, not surprisingly, the number of guest counts per store per day does correlate pretty highly to consumer awareness of this. So the markets that have been able to more effectively promote and raise the customer awareness are getting higher take-up per day. I'm not going get into the actual comp buildup on this one, but it's a meaningful contributor in the restaurants that offer delivery. As I say, I want to just make sure we're guarded about what we're saying. We're in 5,000 restaurants so far out of 37,000. So it's meaningful in those that offer it, but clearly we've got some ways to go to get the further scale across the global system.
In terms of profitability, it's important that the vast majority of our business is incremental because the way that we're working with the third party operators is – obviously, there's a commercial relationship between ourselves and a third party operator that would take some of our margin. So we need certainly more than half of this business, if not more than that, to be incremental. And we're certainly finding that we are well up that scale actually. It's really, really encouraging for us.
And part of the reason we know that is because we're beginning to collect the consumer data now as well. So we can actually get repeat visit information, daypart information. And the fact that more than 60% of our business comes in evening and overnight, we know is reinforcing the fact this is an incremental business opportunity, revenue stream that we weren't previously tapping into.
But we're also getting very strong repeat business from those that use it as well, which again further encourages us. And one of the things we are focusing on internally is what is there that we can do to get the awareness of the fact that we're offering delivery higher up in consumers' minds. So, yes, it's profitable. It's incremental business. And we're looking to continue to go hard at this. And we certainly know our operators are enthusiastic, as are we, as a corporation.
Source: Seeking Alpha transcript
"our margin"? ... Lots of words to say that Operator profits don't matter and all that matters is the small incremental sales increase on which the company and the shareholders take their full profits.

November 7, 2017

Heard It Through The McGrapevine

It's surprising to hear that the goal for Mobile Order and Pay is 15 - 20 GCs/day. That's sure tiny. I assume that goal will increase as adaptation increases.

Also, it's surprising that UberEats GCs are a couple of dozen a day. Or, maybe that's a good thing - less money losing transactions the better. 

And yet McDonald's Operators will be forced to spend marketing resources to increase McDeliverys.

The above numbers are surprising but it's shocking to hear that the level of commission paid 
to UberEATS (by McDonald's Operators) is supposed to be a secret. The Operators involved 
in McDelivery can't discuss it and have signed non-disclosure agreements.

Now I've seen it all. McDonald's Operators not allowed to discuss sweeping system changes with their fellow Operators. 

What else is hidden by those NDAs?

Trump Sends Bodyguard to McDonald's

Trump bodyguard would go to McDonald’s when WH chef couldn’t get burger just right

November 4, 2017

McChickens Are Flying All Over Philly

Uber's PR department seems to be operating independently of any of their "partners".

* If a McDonald's Operator gave out product mix information to the local press they'd
  get a call from the region or a nasty letter from Oak Brook legal.

* A hamburger is not a sandwich? Then how is a cheesesteak a sandwich? Strange.

* I hope this doesn't indicate a national trend. If delivery customers are ordering
  bags full of a deeply discounted sandwiches delivery is going to be very unprofitable.

UberEATS' most-delivered sandwich in Philly? You're McKidding

Chili’s Streamlines Menu - McDonald's Goes Other Direction

Chili’s streamlined menu speeds up service times

November 1, 2017

Extra, Read All About It

The pool of reporters we deal with are pretty well educated as to the reasons existing McDonald's Operators rarely, if ever, speak to the press. However, some reporters are
open to the idea of working with former McDonald's Operators.

If visitors to this website are former McDonald's Operators they might consider this 
media opportunity. Or, if visitors know of a former Operator who might be interested, 
please pass on this idea.

So far there are only two criteria: A) The former Operator(s) should be familiar with contemporary issues like EOTF, B) They should not expect to do this anonymously, it's
hard to tell a human interest story without naming the human.

Interested parties should contact ...

Krispy Creme Owner to Buy Dunkin?

JAB could acquire Dunkin in its quest to build a coffee empire

October 24, 2017

Out Of The Mouths Of Children...

From today's investor conference call:

McDonald's USA President says, "there is no concerted effort to change the franchisee
base.” But, he added, the chain does have expectations for performance. “Running 
better restaurants is expected,” he said, “and we've outlined an exciting, ambitious 
growth plan — one that requires investment. As you put those two together, the 
performance expectations and the investments, we’re seeing some owner-operators 
who say that now is a good time to exit the system.”

Stated by an accountant who's never run a business and certainly never a restaurant.


MCD Says Nearly 100% of Operators Support $1,$2,$3

McDonald's Rolls Out Successor to Dollar Menu - Bloomberg

Analysts Comment on MCD Q3

McDonald’s: They’re Loving It!!! - Barron's

October 21, 2017

Smashburger’s Quiet Turnaround

McDonald's veterans will remember that Tom Ryan worked in McDonald's product development in the 1990s.

Ryan claims responsibility for
McGriddles, Big 'n Tasty, Dollar Menu, 
and Fruit and Yogurt Parfaits

NRN visits with Smashburger’s CEO

Here's more than you want to know
about the trademark lawsuit between 
In 'N Out and Smashburger

Intellectual Property Brief reports

Daily Paychecks?

Restaurants are trying to appeal to millennials with daily paychecks - Business Insider

October 19, 2017

Higher Food Prices?

"Specifically, if food prices climb across the board, it could be good news in 
that it minimizes discounting and helps return the restaurant industry to a 
more normalized pricing environment."

Higher Food Prices? Let’s Take the Whole Family Out! - Barron's

October 7, 2017

Just The Beginning Of The Bad Press

'Rick and Morty' fans turn on McDonald's on Twitter after sauce debacle - SFGate

Another 'Rick and Morty' fiasco: The great Szechuan sauce letdown - Tampa Bay Times

McDonald's Marketing Needs Adult Supervision

Anonymous has left a new comment on: "Great TV Appearance By McDonald's Operator": 

Great marketing as opposed to today’s FIASCO with the “limited” sauce. 

A friend told me his store got 20. Maybe one store in 300 got ANY. Brilliant. 

So customers run to their local store to be told, nope none here. And those 
who did have any had 20 packets?? REALLY? 

Only thing accomplished today was to piss off thousands of people. 

This is the future of marketing?!?? Competitors are laughing as they should be. 

Managed to screw yet another great idea up again. 

Stupid, right up there with the fork thing and rainbow fry boxes. 


McDonald's Operators can expect this kind of thing to happen a lot in the future.

Now that McDonald's USA will have mega Co-Ops, humongous ad agencies, and OPNAD 
having been spayed and neutered McDonald's marketing will be one disaster after another.

Where do such bad ideas come from? 

Not to get all political but you mentioned the rainbow fry boxes. McDonald's is run by people
of the liberal persuasion. And, advertising agencies are staffed by extreme left-wing liberals.

Liberals generally look down on the people they wish to rule and consider the population to 
be stupid and incapable of caring for themselves. Liberals think the citizens can't take care 
of their own healthcare, too stupid to handle guns, too dumb to improve their lives without 
government's help.

This attitude is a form of contempt for the average American. When corporate liberals make 
decisions with this bias the result is often abusive to their customers (or in McDonald's case, 
abusive to the Operator's customers).

Who else would think it a good idea to deliberately frustrate thousands of die-hard fans?

And now we'll hear wailing and moaning from Oak Brook about the negative press - "We had 
the best of intentions".

Like I said, now that McDonald's Operators are being taken out of the decision making loop 
this kind of thing is going to happen over and over again.

October 5, 2017

I'm Sorry, But This Is Funny

I have a real dislike of protesters, picketers, and demonstrators of all kinds but sometimes
flash mobs can be really clever. This must have been a lot of work to put together. I'm 
sure many McDonald's people will be uptight about it - but come on - it's fun!

A Mob of Phony Ronald McDonalds Bully a Burger King

Sears's History Predicts Almost Everything Amazon's Doing

This article isn't about franchising or hamburgers but those of the Boomer generation
spent a lot time in Sears stores just as subsequent generations are shopping on Amazon.

The Atlantic - Sears & Amazon

October 4, 2017

Great TV Appearance By McDonald's Operator

As someone who's done his share of television work I know a natural when I see one.
This McDonald's Operator is relaxed and funny on camera. Few can pull that off.

Makes one think, why are McDonald's Operators paying millions to public relations 
firms every year when they have such talent in the system?

WIFR TV news in Rockford IL

October 3, 2017

2017 QSR Magazine Drive-Thru Study is Out

McDonald's VP says, "The order-taking process on average takes 17 seconds in our drive 
thrus for simple orders of two to three items. For larger orders with eight to 10 items, 
it can take 50–100 seconds". 

If ordering time is important (and it is) why are some stores wasting time letting the
order taker great the customer with their name? 

The 2017 QSR Drive-Thru Study - QSR magazine

McDonald's VP is quoted HERE

October 1, 2017

Nation's Restaurant News and Fast Food

The current issue of NRN features four articles about "Fast Food" including a comprehensive piece on "How McDonald's became the symbol of fast food".

I suggest readers check out the Editor's comments. At the end of her piece there' s listing of the other four articles. From the editor: The truth about quick service

You may have to register with your E-mail, it's easy and free.


September 26, 2017

Only In Russia

Burger King Russia Wants 'It' Movie Banned Because Pennywise the Clown Is 'Exact Copy' of McDonald's Rival Clown

Is McDonald's Corp. Running Out Of People?

Less than a month ago Oak Brook's Pajama Boy sent out an E-mail listing a number of "retirements" by long term corporate employees. Among the retirees was a Jeff Wilfong 
from the Northwest Region.

This week the word is out that the same Jeff Wilfong will be the new GM in Raleigh. 

If McDonald's has any kind of bench why would they need to cancel someone's retirement 
to staff a VP position?

Downsizing is tricky, sometimes you go too far. Especially when you know so 
little about 
the business you're downsizing.

September 23, 2017

McNews From Small Town Iowa

This article caught my eye because:

* Growing up in Sioux Falls SD I had family in several of the towns mentioned here.

* The selling Operator, Steve Jackson, and I did our time in MCOPCO and Field Service
   at the same time in what was then the San Diego Region.

* The buyer says they were "selected" to buy Jackson's stores. I presume that means 
   "selected" by McDonald's Corp. 

Whatever happened to putting stores on the open market, competition, negotiations ???

Local News: ‘This is going to be our home base’

More from NRN's Maze on McDonald's Competitors

Investor: McDonald’s success is bad for burger stocks

September 20, 2017

McDonald's Taps Publicis.Sapient, Capgemini for Global IT

I've not even tried to keep up with the reshuffling of McDonald's USA ad agencies
but this one looks interesting. The new digital agency will hire about 100 current 
McDonald's employees thereby reducing McDonald's overhead. Then, going forward, 
Capgemini might be asked to bill McDonald's Operators for digital services currently 
being funded by McDonald's Corp. 


McDonald's Taps Publicis.Sapient, Capgemini for Global IT | Agency News - AdAge

September 19, 2017

McDonald's "Comeback" Hits Smaller Chains Hardest

Jonathan Maze is one of the best financial writers covering the restaurant industry 
which is why so many of his articles show up on this website. But, on this topic I think 
he's missed a fine point.

Over the past two winters (2015/2016 and 2016/2017) sales at the national QSR chains 
have been helped by extremely mild winters in the Northeast and Northern Midwest. 
The smaller  regional chains would not have benefited from the mild weather, especially
the large number of smaller chains that have grown up in the South or the Western U.S.

In'N Out, Jack-In-The-Box, or Sonic wouldn't have benefited from this weather pattern. 
Chick-fil-A maybe a little, but they are still mostly in southern and now western areas.

It kind of proves my theory when Jonathan points out that Burger King and Wendy's did
a pretty good job of keeping up with McDonald's. Of course they did, they also have a 
high penetration of stores in the states where winter weather matters.

Opinion from NRN's Jonathan Maze

Washington D.C. Has No Room for QSRs

Capitol Riverfront McDonald's, Union Market-area Burger King in the raze pipeline

Village of Oak Brook Wants Amazon

Oak Brook to bid for Amazon headquarters at McDonald's site