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November 13, 2017

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?
.

3 comments:

Richard Adams said...

Not to mention other expenses based on a percentage such as Co-Op and OPNAD.

Anonymous said...

Raise your prices on UBER delivery orders you will more than make up the delivery commission and McD’s rent & service fees this easily done in RFM tables; have different prices for in store and delivery.

Anonymous said...

Lonnnnnng time Operator. It's so ridiculous its a replay of the Emperor's New Clothes. Since when do the numbers not matter? You know our US President will be gone some day. They never stay. CEO he'll leave as soon as the end of the run is in sight. If you pull every expense on most of these transactions, we aren't making a dime.

EOTF and fresh meat.. remodels at 10 years, no guidance on how we will store that mush fresh meat in current refers, new grills that only ad one more position. Hey, when those platens are down for 2-3 sandwiches... the beef grill is full.. done.. no more fresh orders...

Technology... is a joke, not even up-to-date.. a jumble of pieces of software.. and the maintenance and upgrade costs.

Business consultants who don't consult and haven't a clue.. glorified Inspectors.

Hang on it's going to be a rocky ride.

United we stand Operators, Divided we fall. Many great initiatives but ideas are like XZZDFTUS everybody has one. We need management.. the real deal.