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.