MCD still has many stores that should have never been built. These stores are sucking the life out of local markets and operators struggling to keep them open. They have closed about 220 and they could close another 100 without weakening the system. However, keeping them open provides justification to keep hundreds of staff employed. The bureauocracy is running the company for their own benifit. It needs to stop. The stock price is $50.00 to $75.00 lower than it should be. Easterbrook should finish what he rightfully started. Close non performing stores and release many more employee's. Shrinking in this case is good.
The sad part is in McDonald's we close stores doing $1.5mil in volume because they are not profitable it is amazing that we cannot make money with restaurants doing $1.5mil other QSR's would love volumes at $1.5mil and be profitable.
Right and that is a good point. 30 years ago you could open a new MCD restraurant for between $275,000.00 and $315,000.00. Today, you are looking at $2,400,000.00. A PAC of 25% to 28% was very good as Non-controllables were no more that 24% with depreciation at 4%. Ave. vol was $1.5. This left room for high enough profit to pay principle and take money home. Today, due to reinvestments debt service is much higher and non controllable costs can exceed 31%. Today, average volume is approaching $3.0mm. Higher rents, debt service, Insurance, taxes in DOLLARS not per cent is making things much more difficult. We have done this to ourselves. MCD thinking that building more stores in a trading area to keep competition out never worked. A new MCD would be built impacting another MCD and competition would come in anyway. Thus, nobody made any money. Then we would reinvest by remodeling, playplaces, rebuilding and pulling back on local store marketing. We started buying our customers by deep discounting giving away .50 cent Happy meal premimum's, on and on!Sales increased but cost increased more. Again, you are right. I had a store that did $875,000.00 and I put 10% on the bottom line every month, every year. It was a company store and they gave it to me to run while it was being relocated. It took two years to get the new site open but it was a sweet ride. It was a "shit hole" no question about it. The point is we could make a lot more money by doing things different and making better business decisions.
Half the McDs in Walmarts need closing too!
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