December 6, 2018

Fraidy-Cat Operators

It's disappointing to hear that there are still McDonald's Operators who are afraid to attend Operator-Only meetings.

I submit that those Operators who are still afraid are kind of stuck in the past. They've been busy running their stores and haven't stopped to realize that they are afraid of a company 
that no longer exists.

Let's take a look at McDonald's USA's current ability to retaliate:

* The McDonald's USA management team is incompetent, the gang that can't shoot straight. They don't understand the business, franchising, or franchisees. 

* McDonald's USA appears to be understaffed and no longer has the army of corporate goons with which to bully Operators. They've downsized themselves into impotency.

* McDonald's USA has a serious shortage of McDonald's Operators. This goes back to the incompetence of the management team. Their plan to reduce the number of USA Operators 
is strangling their own efforts in many other areas. If they were to try to force an Operator 
out, who buys the stores? If they deny a rewrite, who takes the store? This is especially important now that there are so few McOpCos.

* The USA management team will spend 2019 distracted by the problems with BBV2020.

* I can see how, if a McDonald's Operator attends a worldwide convention along with thousands of other people, they might come away feeling like a tiny cog in a huge machine. Well, they're not a tiny cog. If there are really only 1,700 McDonald's Operators left in McDonald's USA the individual Operator is part of a very select group.

* And there's safety in numbers. These Operator-Only meetings aren't a dozen nervous people secretly meeting in the back booth of a Denny's. The first meeting involved 25% of USA Operators. The next meeting looks like it will involve more than half of USA Operators. 

How does McDonald's corporate put that many Operators on their enemies list?

If an Operator is afraid to attend such meetings they might be reacting to years of conditioning that no longer applies.

Keep this in mind - The corporate side of McDonald's USA has been pushing hard on BBV2020 yet it's unlikely that the people doing the pushing will still be with the company when the 2020 Worldwide rolls around.

11 comments:

Anonymous said...

I walked among many of them this week at a regional meeting. My impression is that they are smart, work hard, mean well, nice people. However, they just don't know what they are doing. They are starting to realize it themselves. They all have a steep learning curve to get through which can take years. The marketing crowd just doesn't get it. I told one of them that we need better local store marketing. The response was happily that you guys can do whatever you want to do in that regard. I explained that with all of the national discounting you can't do much local store marketing as we would be discounting the discounts. Who ever heard of "any size drink for $1.00" Its like they don't want to make any money at all. I was hearing from other operators that in many major markets that maybe one store out of five have completed an MRP. Florida and California are way ahead of the system. Thus, it's going to take many mega millions of dollars to implement that program and to get it done in the time frame they are demanding is near impossible. The new contractors are also going through a learning curve, as well. Because of their ignorance they have built themselves huge problems that could really hurt all of us. They don't realize it and would never admit it but they need the operators now more than ever. I predict that the company will soon be required to provide internal financing as the banks will see the cash flow problems that they have created and are not going to want to make loans without full recourse to the company. Store values are dropping!! I urge everyone to come to the meeting in Dallas on the 12th. We need to be a major part of the solution.

Anonymous said...

As a leader of another franchise system's owner association: attend. Every Wall St analyst and investor I've spoken to asks my opinion of what is going on with MCDonalds, Jack in the Box and Papa Johns franchisee associations and how they will affect the business. MCD management is afraid of you because of this. Keep it up. That is all the management cares about, not your opinion. They are desperate to keep you quiet for fear of answering to Wall St. Wall St is paying attention to you for once. Take advantage. MCD managers don't care about you at all. They will heed their money masters, though. Cut manage to out of your conversations until they start respecting and acting on your requests.

Anonymous said...

As long as the stock is at an all time high, management will delude themselves into thinking that everything is ok and that they are doing a great job. After all, look at their bonuses. As such, the problems are with the operators of which there are always a few complainers that stir up the system. I'm sure that is what the Chicago folks are thinking.

Anonymous said...

Unfortunately, I cannot attend the meeting in Dallas. However, I did send in my commitment card -- as should everyone who cannot attend. One problem with recent mcd announcements, that I think needs to be addressed, is the extension in BBV2020 and the perceived "punishment" associated with it.

That being mcd was contributing larger dollars to get these projects done -- and now, with no fault of the operator -- they are reducing their contribution as the projects get extended. This essentially penalizes the operator because of increasing costs, lower cashflow, and high unemployment. NONE OF THESE ARE CONTROLLABLE by the operator -- Even cashflow to a certain degree.

Anonymous said...

There are so many markets that have not begun to make the required improvements that the time extension will likely need to be increased. Plus, financing will become a major issue. I personally know of operators that have been denied financing from long term MCD Banks. When they look at pre-debt cash flow and the amount of money needed to complete these projects and the low sales increases generated it is not a good loan from the bank perspective unless guaranteed by MCD. When that happens the stock price may be impacted. We need to get back to thinking about selling product as our main focus. There is real pressure on wages and debt service is increasing, sales are struggling and USA top management doesn't seem to understand the problems. All of this has been brought on by corporate decisions. All of it!

Anonymous said...

Good poit’s

1. In 2018 I did 2 MRP’s with a GREAT grand opening as COMMANDED Now early December both are DOWN guest counts
my sales are higher - but I raised prices

2. 2 scheduled in 2019 ASSUME similar results. All that money - for what?

3. I also heard of operators in our co-op that have been turned down for loans and are working on special financing with the
bank

4. A random survey of operators I know - only 2 out of 17 have better cash flow compared to 2017. Although this is a small
sample out of the 1,700 of I would GUESS only 20% of us at doing better this year

5. Selling their stores to operators was a GREAT idea for MCD. They have very little skin in the game - their remaining
locations probably average 3.5 million compared to the 2.8 million real average nation wide

6. Staffing thruout the country will only get worse - the small changes being made (like prerolled burritos - salads - parfaits)
will not put a dent in our problem. Even long time GM’s ar leaving us because of the stress they are facing They are leaving
for lower paying jobs that do not have the daily issues we are facing

7. I will not be able to attend DALLAS but I will sign a commitment letter


MMGA


Anonymous said...

I have direct knowledge that Chase Bank will not lend to an operator if that operator is not eligible for growth and/or rewrite of a specific store. That information is shared between the Region and the Bank per the following from Chase Bank: "Chase and McDonald’s may obtain from and disclose to each other financial and other information about McDonald’s Owner/Operators with whom Chase has or had a lending relationship, including but not limited to, financial condition and the existence of any loan or franchise default. "Including, but not limited to" is very broad and
can cover your entire relationship with the Company, whether financial or not. In other words, McDonald's can keep you from getting approved for a loan needed to upgrade your store which does not meet RB&ES. Good news: US Bank does not use "growth and rewrite" in their loan decision criteria. You probably already knew this, but I wanted to get the information out there for all to be aware of.

Anonymous said...

I am attending Dallas and in support of the group's efforts whether you agree with them or not you should attend as they have an ear to McDonald's Corporation and NLC and they will drive change so if anyone is driving change in my business I would want to be there to give my feedback.

Anonymous said...

I can't help but think that the Banks will start asking MCD to guarantee the loans to operators. At least to the operators that are in trouble. It only makes sense for them to do it. The company will likely begin by making internal ten year loans with repayment included in the rent collection. They have said that the number one priority for 2019 is to improve operator cash flow but no information was given on how they plan to do it. As a factual matter, the MCD system is moving away from a pure franchisee system because of the high cost of store operations requiring MCD to partner, become a lender with better terms than the banks or repurchase stores and give them back as BFL's or some other solution. Regardless, a pure franchisee system where the franchisee is independent with control of his business has not existed in MCD for a longtime. MCD wants to control too much. When they do that they always create problems. When they have the authority to force discounting, reinvestments, staffing, new products and national marketing programs we are no longer franchisee's. We are simply partners with all of the liability. MCD is constantly trying to change the system to give themselves more and more control of store operations without actually becoming operators themselves. Join NOA!!!

Anonymous said...

When is Charlie Robeson and Charlie Strong going to either leave the company or be fired. They have been around long enough to know better than to be part of what this company’s has become!

Richard Adams said...

Somebody correct me if I'm wrong but I read someplace that Robeson was "retiring" soon, at the end of the year?