March 14, 2018

McDonald's Accountant Talks Operations and Marketing

On Wednesday McDonald's CFO presented at a Bank of America Conference. This comment 
appears to be gibberish. Is this some kind of McNewSpeak? 

I understand incremental sales, I understand break-evens and contributions margins.

"And so on a margin percentage basis, the franchisees get a lower margin percentage on 
this sale than they do if someone came to the front counter because the added cost is this commission. But in terms of additional dollars, the fact that 70% incremental is giving 
them clearly more dollars and our breakeven, if you will, incrementality is substantially 
below 50%. So there's a lot of room, let's say before we get anywhere close to breakeven 
from an incrementality standpoint."

Here's a transcript of the presentation:

McDonald's Management Presents at Bank of America Consumer - Seeking Alpha
.

5 comments:

Anonymous said...

Absolute BS. Nothing but doublespeak

Anonymous said...

Oh man...16 years in accounting! He needs to stick to just putting together fake spreadsheets. I do not think Kevin could ever make it as a franchisee or operate a restaurant, does not understand the franchisee side of the business.

Anonymous said...

Why would they listen to an accountant on such a broad range of topics? I can see he would have feedback on the numbers but little else.

Richard Adams said...

While not all analysts are CPAs they typically have a financial education and background, many have their MBA. Given that mindset, the CFO of a major company has total credibility and he/she can get away with a lot of smoke and mirrors as long as the numbers add up. And this was just a sponsored investor conference. The quarterly conference calls require more than just the CFO. Though, when Jack Greenberg was in his last days at McDonald's and everyone was calling for his head, he would have the CFO do the quarterly conference calls alone. I doubt that could happen today.

Anonymous said...

Wow a bunch of pretend grownups spouting jabberwocky back n forth. Scary that the financial analyst community is that shallow. Thank God I got out just in time.