November 13, 2018

Working to Reduce Average Check

I spent much of last week talking with reporters, analysts, and 
McDonald's Operators about the problems created for franchisees 
by the never ending discounting in the QSR industry.

Then, over the weekend, I stopped at a McDonald's drive-thru. 
Pulling into the inside lane I was confronted with a back lit display
box mounted six or eight feet in front of the full menu board. The 
message in the sign was essentially the same as this banner to the
right >.

Riddle me this - you've got me in your drive-thru lane, I'm not going anywhere, why are you suggesting I order your cheapest food? 

Wouldn't an Operator prefer I spend a few more bucks on a signature sandwich meal? 

I remember when increasing the average check was a good thing. 

November 6, 2018

October 25, 2018

Burger King Plays Catch-Up

Three years ago McDonald's began copying the path Burger King had already been
on for several years - financial engineering and refranchising.

Since Wall Street believes the McSpin, Burger King is now copying McDonald's
digital strategy - not because it works - because it impresses investors.

"Burger King Of Tomorrow" or BKOT?

Burger King’s owner plays 'catch-up' on technology

October 24, 2018

A Discussion on Twitter

This is a super legitimate point. Just about every major QSR chain in the publicly traded universe has unloaded nearly all of their stores on franchisees. And then they discount the hell out of the menu even as labor costs skyrocket.

National Owners Association Has Updated Website

With videos of October meeting and historical McDonald's clips

October 18, 2018

Discounting Fails Del Taco

"During this past quarter, Del Taco found weakness in its bargain $1 Chicken Quesadilla Snacker, which drove customers into the store but failed to pay off in sales for the brand."

Del Taco Shifts Value Menu Focus

October 16, 2018

NRN and QSRmag on NOA

McDonald's Operators Move to Form Franchisee Association - NRN

McDonald's Franchisees Band Together - QSRmag

From One of MCD Corporate Internet Trolls

just let franchisees push the ETOF remodel for their restaurants by 1 year (into 2020) if their restaurant was recently remodeled. Let’s operators get 1 more year out of a location which decor may only be 2 yrs old (& still may be paying off that CAPEX). Great move

October 11, 2018

Best Line of the Day

"One (1) email generated a response from 400 operators to come to the meeting. Operators from all over the country flew through a hurricane to get to Tampa. 

October 10, 2018

Start Of Something Big?

McDonald’s operators consider a franchisee association

Attorney Carmen Caruso on Facebook

Today I addressed a meeting of over 300 McDonald’s franchise owners gathered in Tampa, Florida, who are seeking to work with McDonald’s to positively impact the system for the benefit of all franchisees, McDonald’s company, its shareholders, and ultimately the customers.

October 9, 2018

This Is The McDonald's Fred Turner Warned Us About

If you've taken my advice to read John Love's book "McDonald's: Behind The Arches" 
you'll remember the last several pages of the original book focuses on Fred's dream of 
having McDonald's Operators and suppliers own a large chunk of McDonald's stock.

At the 1986 Worldwide Fred told the convention, "I own some of your store, now I want 
you to own some of mine".

The book says this effort was about making the company more entrepreneurial. Maybe 
it was but there's a back story. 

McDonald's was a darling of Wall Street and management was concerned that outside 
investor groups or hostile entities would someday control enough shares to have a major influence on how the company operated. Putting 20/30/40% of the shares in the control
of McDonald's Operators, suppliers, and company employees could prevent that from happening. 

The three-legged stool would be able to protect the company.

Protect it from what? Investors who didn't understand the culture of the system. Greedy investors who wanted to take excessive cash out of the company. Shareholders who didn't understand the need for solid, productive franchisees.

But now, five years after his passing, Fred's fears have been realized. It happened from 
the inside, not by outside robber barons.

The company and the Operators have been stripped mined to return cash to MCD shareholders. The culture has been changed or erased by individuals who don't know 
what made the system successful. Franchisees are considered liabilities not an asset.

The McDonald's board of directors was once peppered with executives from some of the 
major system suppliers. Those folks are gone and the board is made up people with no 
history with, or connection to McDonald's.

Only McDonald's Operators can fix McDonald's because they are the only people left who remember how McDonald's is supposed to work.

JIB Franchisees Are Revolting

Jack in the Box franchisees want the company to replace its CEO

September 29, 2018

And We Think the USA Has Too Many Restaurants

McDonald's and Burger King didn't take off in Vietnam - Six minute video

Know-Nothings Hiring Know-Nothings

I'm sure most McDonald's Operators are numb to it but I still find it astounding that McDonald's Corp got rid of so many experienced operations people and is now out on 
the street trying to replace them with people with zero McDonald's experience and  immediately thrusting them into operations positions.

Case in point - the Chicago field office just promoted or hired six new people to be 
"Operations Associates". Two are experienced McDonald's people. The other four are 
from off the street. One from Panera, one from Starbucks, one is a former Firehouse 
Subs franchisee, and one from Berlin Packaging.

Rumor has it that the Denver Field Office is busy hiring Burger King people.

I guess if the decision makers at the top have so little experience with McDonald's they 
don't know the value of a team with deep experience.

Also, the job description for an Operations Associate is "Offer expertise in tools and 
resources for restaurant operations (shift management)".

How long does it take for a person off the street to become an operations resource for McDonald's Operators? A year? Two? Three years?

Wondering About World's Largest McDonald's Franchisee?

                                    Investment Sticky Note: Arcos Dorados Holdings

September 23, 2018

McMisleading Advertising

I recently visited a McDonald's store in a market that does not offer McDelivery. Yet, the 
P.O.P. for Glazed Chicken Tenders mentions McDelivery. What's up with that?

Takes me back to 2009 when OPNAD launched nationwide advertising for McCafe when 
less than two-thirds of the stores in the country had the product. Will OPNAD be just as premature when they advertise McDelivery?

Many Operators think this blunder hurt the success of McCafe.

LYFE Kitchen Almost DEAD

Interesting because:

1) LYFE was founded by two former McDonald's execs, Mike Roberts and Mike Donahue.

2) More proof that no matter what surveys, focus groups, and politicians say, consumers
    want tasty, filling food. Chains that don't offer such are doomed to fail.

Carlisle Corp. sells off struggling LYFE Kitchen

September 19, 2018

September 17, 2018

McDonald's Shares Have Not Had a Good Year

McDonald's Shares Go Rancid - TheStreet

The above article includes a short video of Wendy's CEO talking about kiosks, mobile 
ordering, and drive-thru.

September 15, 2018

Trading Spaces

I recently talked with a former McDonald's Operator who commented that, when pulling into a McDonald's parking lot, he gets the impression that McDonald's is doing everything to keep customers from parking and dining in the restaurant. He was referring to all the signs advertising McDelivery, mobile ordering, and curbside pickup. I hadn't looked at it that way but I have noticed these initiatives appear to be eating up the parking stalls most convenient to the entrance to the restaurant.

Soon after my news-feed picked up an article from the Netherlands about a deal to install charging stations at 168 McDonald's. Most businesses tend to install these facilities in the most visible spot on the property and that's usually near the entrance, often next to the ADA required parking.

Less convenient parking sends more customers to the drive-thru and hopefully not to the competitor next door who probably has parking right in front of the door. In theory this makes it harder to justify dining room upgrades and kiosks.

September 13, 2018

Eating Habits Are Changing Faster than QSRs Can Keep Up

If only McDonald's had an attribute that made it more attractive than cooking at home.

Wait! Fast service could, but McDonald's leadership is going in the other direction. 

Fast Food Races to Meet Americans’ Growing Demand to Eat at Home - Bloomberg

September 11, 2018

Is McDonald's USA Slowing Service Benefiting Competitors?

Sonic stock surges on improved traffic

From comment below, "Of course there is nobody left in McDonald’s operations who even knows that there are lines in the cups, even if they happened to notice the lines they certainly don’t know what they are for. Even if they know what they are for they don’t know why." 

September 5, 2018

Wide Gulf Between Average and High Frequency Diners

High-frequency customers are first to notice, and first to be turned off by, slow service.

Wide Gulf Between Average, High Frequency Diners - Franchise Times

McDonald's Operator Comment of the Day

Modern and progressive would include the company “investing” into O/O’s ability to attract and retain higher quality people. Our business model DOES NOT support the salaries needed to compete with Chic, Hobby Lobby, Buccees gas stations. 

If they’re so interested in modern and progressive and attracting and retaining the best available they’re going to have to allow us to play on a level field. We just can’t offer the pay and benefits others do, no room. These “investments” like college tuition etc sound great but we are busy making note payments and paying rent/service fees and shouldering more annual expenses every year. 

I don’t recall a mebtion of 2% food cost (as a %of sales) at the gallery walk. We were unprepared for this and it isn’t getting better. 

I can’t pay $14/hr with full benefits like the guys mentioned do so we usually get those who others don’t want. Oh, and at business reviews we get to explain why our turnover is so high? Hell, I’m losing 20+yr vets who *were* lifers. They’re tired of unrealistic demands and irrational field service idiots with less experience keeping them on the defensive. 

The whole thing is broken. Leadership is running out of people to blame, they fired those who might have helped. 

They are obsessed with analytics, their own tell a pretty compelling story. 

We will see if the next bunch lives in reality, I predict these guys will soon see the door. Their own obsession will be their undoing.


September 4, 2018

August 29, 2018

Are McDonald's USA Same Store Sales Doomed?

An analyst buddy sent me the above picture asking for my feedback on this new product test. For the 500th time I had to explain that I don't track or pay much attention to new product tests at McDonald's and that new products often do more harm than good.

This is obviously a picture of a tray liner from one of the test stores. What caught my attention was the term, "made to order right in our kitchen".

Here we are again. Made to order means slow service, pure and simple. And McDonald's can't build sales selling slow food.

There's a reason the average Five Guys barely does $1 million a year, they are dog slow, almost deliberately. There's a reason the average Chick-fil-A does almost $4.5 million, their service is blazingly fast.

No amount of discounting or food giveaways will keep McDonald's USA sales from declining to Burger King levels if HOTG or "made to order" becomes the operating standard.

August 28, 2018

Jefferies Excited About McDonald's App

Analyst Andy Barish can be reached at:

Buy McDonald's shares because its mobile deal app usage is surging

Featured Comment of the Day

Anonymous said...
Let do a quick review, Chris K., like all good snake oil salesmen sold us a plan that “WE” all knew in our hearts wouldn’t work. Regional Leadership pressured us to signing under duress on the bottom line the “Letter” that would become our undoing. Gladly many of these Corporate stooges have learned how important they were to the system when they were shown the door. Now we are in the “Save Chris” times, as with the movie Ferris Buller from the same city we are being lied to everyday. Our car has been stolen and the garage attendants that run this company they are running up the miles on our business each day destroying the value of a business that we depend upon. The “Millennial Force” that attend daycare at MHQ each day have no knowledge of our history, our founder or our business and would never tell their peers what company pays their salaries. These blue hair geniuses walk around the West Loop believing in “Change” because Chris & Steve tell them they are part of a movement to change the world. Ever heard of a cult? They think how they are told to think.

Leadership collectively believe that owners are idiots, and honestly why would they not? Sadly things are going to have to get worse before they get better. Individually folks are scared to speak their minds in fear of reprisals from?? They aren’t even sure who does what but I digress. Until operators decide that this is our business and leadership are just temporary in position for the stock market we will continue to be bullied. Ray said “None of Us is a Good as All of Us”. We owe it to Ourselves and Ray to fight the good fight to preserve the brand that we all owe our livelihoods to each day. I am starting to see waves of courage from individual markets voting down the latest wave of OPNAD entitlement. Travis has sold us out to corporate and Chris continues to push the edges of control. Like any good dictator he has eliminated any dissenters from his ranks and is pushing for total control by trying to empower the OPNAD body to have total control. Don’t be fooled by the “More Nimble” propaganda, its all about total control to “Save Chris”. Make sure you stay strong and tell OPNAD NO!
There more great Operator comments on posts "Tried the BBQ glazed tenders" and "Waiting on my tenders"

August 25, 2018

Why Some Restaurants Are Losing Customers

Jonathan Maze is one of the best journalists covering restaurants and Howard 
Penny is one of the most independent minded analysts covering restaurants.

In this pod cast the two discuss the QSR industry and McDonald's.

That's the first 25 minutes. The remainder is Jonathan and one of his associates
discussing start-up chains.

From Restaurant Business Magazine

August 24, 2018

Waiting On My Tenders

In last night's post, I neglected to mention that I got pulled to wait for my tenders order. 
The crew person said they were cooking my tenders. Now, my order included a QPC so 
that could have been part of the hold-up.

Nevertheless, from the time I parked in the designated stall to the time I received my 
food was a full SIX minutes. As a customer, I might try the tenders again. If I have to wait
second time I'll likely not order tenders again. I'll order something I know is quick (McChicken) or I'll go to the Taco Bell/Arby's/Sonic across the street.

Remember, the dumbest words ever uttered by a McDonald's corporate employee were 
said during the introduction of Made For You:

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

August 23, 2018

Tried the BBQ Glazed Tenders

Pretty good product. I went to the drive-thru and the tenders smelled so good in my car I 
had to pull over and try them. When I opened the box I thought to myself, "this has got to 
be the messiest product McDonald's has ever sold".

I finished one tender without staining my upholstery but took the rest back to the office so 
I could wash up in the sink after eating the remainder.

I spent a while wondering, "What were they thinking, developing such a messy product".
With McDonald's being such a drive-thru business, messy products do not sell in large 
numbers. How many orders of Hotcakes and Sausage are sold in the Drive-Thru?

Then it dawned on me - BBQ glazed tenders are for McDelivery! Management is planning 
on loading up the menu with new products that will only be applicable to McDelivery.

That'll simplify things!

A Lobbying Opportunity

Susan Kezios, President of the American Franchisee Association has asked us to make franchisees aware of some interesting legislative activity that may impact franchisees.

A Federal program called EB-5 was initially created by Congress on 1990 but is up for 
renewal in September. The EB-5 program allows well capitalized immigrants to invest in
the United States and eventually receive permanent resident status.

Small business and franchises have had access to this capital but with this renewal large 
real estate developers are leaning on Congressional representatives to delete the small 
business and franchise language.

The AFA is asking franchises in Iowa, Kentucky, and Texas to flood their Senators' offices 
with phone calls and E-mails supporting the continued inclusion of "small business and franchise" language in the renewal of EB-5.

If anyone is interested in more information I have a package I can send you by E-mail.

Meanwhile, McDonald's Operators in the above three states might consider contacting 
their Senators.

August 22, 2018

Apparently the Person Running the McDonald's Twitter Account Has No Idea How Things Work at McDonald's

I wish McDonald’s did sweet potato fries🍟
Hey there, Millie! Thanks for reaching out! Menu items vary by restaurant and/or franchisee. Let your favorite store know you want Sweet Potato Fries on the menu!