November 5, 2019

From Today's Wall Street Journal

"The typical McDonald’s restaurant in the U.S. generated about $360,000 in cash flow annually, an executive said in March, down roughly $30,000 from two years earlier. Franchisees have formed an independent association to press their interests.".....
"Mr. Kempczinski said in an interview Sunday that operators are enjoying a record year for cash flow. Average cash flow for franchisees has grown for 11 consecutive months through September, executives said last month."
(subscription required)
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A Small Fraction of the Avalanche of McDonald's Articles

McDonald's CEO Shakeup Higlights Franchisee Battle - Business Insider

New McDonald's CEO Has Tense Relationship With Franchisees - Crains

Another Executive Leaves McDonald's - Restaurant Business
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October 29, 2019

Nightmare on Carpenter Street

Yes, last week was a rough one for McDonald's investors. I don't know what's going to happen with McDonald's share price but I can predict what the corporate suits are doing this week. They're in a panic to accelerate several initiatives.

Many Wall Street types and most in the business media are blaming the soft traffic numbers for McDonald's USA on two things.

1) The chicken sandwich wars (about to be amplified by Popeye's).

2) Lack of McDonald's fake meat products. Just because many other chains are adding fake meat sandwiches and the like it appears to be a national trend. It's not, but that's what's being reported.

So, McDonald's management will be expected to jump on these two bandwagons with both feet. Their deadline is the third week in January which will be the next quarterly earnings release and conference call with analysts. Management will be expected to report substantial progress on chicken sandwiches and fake meat.

And that's why we'll see management panicking. They have about eleven weeks to work their magic.

Unless of course,  McDonald's USA turns in some spectacular sales in November and December. If so management will be temporarily off the hook but will still be pressured on the above initiatives.

Meatless meat backlash - Vox

McDonald's expected to jump into chicken sandwich war next year - Marketwatch

Canadian fake meat hasn't been a blowout - Marketwatch

October 15, 2019

Control Freaks in Action - Part Dos

Subject: Leaks in the McDonald's system

While it's very convenient for McDonald's HQ to blame any leaked information or plans
on the Owner/Operator community 99% of the leaks in the McDonald's system come 
from employees of the outside advertising agencies and PR firms.

These people are loyal to no one and are always networking for their next job. 
It's 
important they establish connections with reporters and trade pubs who cover the 
advertising business.

But that makes NDAs a great way to shut down communications among Owner/Operators
while the agency people continue to sing like birds.
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September 29, 2019

Fake "Test" of Fake Meat

Folks, this is not a "test", it's a done deal. It's no more a "test" than McCafe was "tested" in the state of Michigan in 2008. Both companies generated this week's publicity with press releases and announcements on their websites.

Consider this - a major chunk of the share price of Beyond Meat (BYND) is their investors' expectation that McDonald's would eventually serve the product. If this was a real "test" it would have been done in an obscure market without much fanfare. Because, if the "test" 
didn't pan out the value of a BYND investment would drop like a rock.

The fact that both companies created so much press and the "test" is being done in a prominent marketplace means they can't go back. 

From: beyondmeat.com

September 17, 2019

The Plastic Straw Fraud

"Straws account for a nearly immeasurable amount of refuse in the ocean, yet laws are being changed at the whim of a widely shared conspiracy that they pose a significant risk to the planet despite significant evidence to the contrary." 

Why Plastic Straws Are Actually Better For The Planet Than Paper Straws
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September 16, 2019

Fast Times on McDonald's Agency Changes

Why the future of McDonald's marketing looks a lot like Nike's
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Don't Go To McDonald's - Says McDonald's Corp.


McDonald's urges customers to 'stay home'

McDonald's is calling the world's attention
to its huge and ever-growing delivery business this month with a special 'Global McDelivery Night In' on Thursday, an event the mammoth burger-based QSR is pulling off in partnership with Uber Eats...
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September 12, 2019

Seeking Alpha on McDonald's

I don't usually post articles from Seeking Alpha because it's just some one's opinion and the articles are written for money, not necessarily for insight.

But this one is different as the author recognizes the importance of the Owner/Operator in 
the future of the McDonald's business.

It's Not The End Of McDonald's Tug-O-War With U.S. Franchisees
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Uber Continues to be a Cash Burning Machine



California Just Made Uber’s Survival Odds Even Longer - Bloomberg

September 10, 2019

McDonald's Announces Another Tech Aqusition

Inc.com asks, "Is McDonald's in the food business or the tech business?"

We ask - Are these technology companies intended to improve productivity or are
they meant to be a profit center for McDonald's Corp. funded by franchisees?

McDonald's Just Made Another Surprising Move, and It Could Change Some of the Biggest Things About McDonald's - Inc.com

Here's the corporate press release
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August 30, 2019

Crain's on Chicken Sandwich Wars

McDonald's plays catch-up as Chick-fil-A, Popeyes race ahead
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A Consumer Reports

After three Impossible Whoppers at three different Burger Kings, my verdict is in - sellers 
of real meat do not need to be concerned.

It's not a bad product. I finished all three. But it's all bread and condiments. I found no meat
flavor and the patty's relationship to beef is only in appearance, not in taste.

If your intention is to enjoy the sandwich, don't look at the patty. It has a very manufactured look and the broiler marks appear to be painted onto the patty. I suspect they are cooked on
flat grill, not on the broiler.

I only consume a few Whoppers a year but that's enough to be familiar with the distinctive charbroiled flavor of Burger King beef. The Impossible Whopper lacks that taste entirely.

After all the advertising and hype, when Burger King moves on to other products or deals,
the typical Burger King store will sell 10 or 15 a day.

QSR players should ignore fake meat products and focus on the chicken sandwich wars.


August 21, 2019

Blunders in Architecture





The McDonald's brothers and Ray Kroc apparently agreed that it's important to erect a building that would pull drivers off the thoroughfare and into the restaurant parking lot.

While I've never been a fan of the shoe-box McDonald's store architecture I understand that the McDonald's building must evolve. But they don't have to become butt-ugly. The first two pictures above are stores that just completed an MRP. At first glance it looks like the same store but look more closely. One is in the Midwest and one is on the east coast. The third picture is the shoe-box design from a decade ago.

Imagine, you're a parent with kids in the car - would you rather visit the third store pictured for some Food, Folks, and Fun or would you visit the new design that has all the warmth of a Federal Penitentiary.
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Whole Foods CEO on Fake Meat

Whole Foods CEO: Plant-based “meat” not all that good for you
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August 13, 2019

Forbes on Delivery

"The economics of the delivery service on overall profitability is still clouded and will take some time to get a clear picture.  As expected, franchisors are jumping on the delivery service bandwagon whereas franchisees are less enthusiastic. "

The Rush To Offer Food Deliveries Is Leaving Franchisees At The Crossroads
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August 8, 2019

August 5, 2019

It's Not Raining Men

Why is restaurant traffic down? Look to the men
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America's Favorite Quick-Service Restaurants Revealed



McDonald's Operators have expressed concerns about being beat by thirteen competitors 
in the latest Market Force survey.

I say - don't worry about it. It's due to attributes that McDonald's USA can't/won't change.

* McDonald's is the biggest in the industry, and the loudest. Being omnipresent turns 
   people off.

* McDonald's is the oldest. All but the most senior Americans have never known a life 
   without McDonald's. Many of the U.S. competitors are relativity new on the scene. 
   They're more interesting and customers haven't been hearing about them all of their lives.

* Reduced local store marketing means less warm feelings about the local McDonald's. 
   Firing Ronald McDonald didn't help.

* More stores per Operator. Twenty years ago there was a good chance a U.S. consumer 
   knew or knew something about their local McDonald's franchise owner. This helped to            mellow out many people's opinion about such a big company. If an Operator has 
  30 stores they are not going to know very many of their customers. McDonald's is just              a huge corporate entity.

And, as someone has already pointed out, when Americans vote with their dollars, McDonald's blows these other burger competitors into the weeds.

America's Favorite Quick-Service Restaurants Revealed in Latest Market Force Study

QSR Mag covers Market Force survey more extensively
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McEmbarrassment in the United Kingdom

McDonald's hated 'environmentally friendly' straws cannot be recycled – but plastic can – Sun
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July 29, 2019

Goldman Sachs Agrees With NOA

Goldman Sachs warns that Chick-fil-A is taking a bite out of Wendy’s, KFC, Popeyes
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Deep Thoughts

Apparently MCD investors and analysts are comfortable 
with sales increases driven by menu price increases. 
They must assume McDonald's Operators can take 
unending price increases to buoy up the stock price.
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July 28, 2019

Jonathan Maze on McDonald's Second Quarter Results

"Franchisees’ cash flow, meanwhile, has increased for eight straight months. By May, higher cash flow had already eclipsed last year’s decline in cash flow—a decline that prompted operators to form an independent franchisee association.
Ozan said that “more stability in the restaurants” is helping drive labor efficiency, while the higher sales are improving profitability."
Remodels push McDonald’s sales higher
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McDonald's Q2 2019 Results Transcript

McDonald's Corp Q2 2019 Results - Seeking Alpha
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July 26, 2019

How Much of the 5.7% Sales Increase Was Menu Price?

Management says menu price increases were 1/3 of the increase and their brilliant
initiatives were responsible for the balance. What do McDonald's Operators think?

Higher Prices Drive McDonald’s U.S. Sales Gain as Traffic Lags - Bloomberg
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July 24, 2019

Why Are Delivery Companies So Poorly Run?

These delivery companies seem to be run by people who've never operated a business 
before and who've never seen a restaurant P&L statement.

DoorDash drops policy of keeping tips meant for workers - CBS News
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July 15, 2019

Monday Morning Chuckle

This morning's E-mail included an advertisement from Anchor Packaging who appears to be
an industry leader. Look at all the pretty plastic packaging!

Meanwhile, the environmentalist whackos are hassling the food-to-go industry about plastic straws, cups, lids forks and many other items that provide a pleasant customer experience.
And two little girls in London are getting headlines around the world for starting an on-line
petition to stop the use of plastic Happy Meal toys.

Imagine the headquarters of a major restaurant chain. At one end of the building, in the 
office of "Sustainability" the staff (all pajama boys) are working on changing everything 
about the company's packaging thereby degrading the customer experience.

At the other end of the building, the operations staff is working on the delivery program and are searching for ways to use plastics by the ton to improve the quality of delivered food.

On the top floor the CEO is trying to figure out how to be politically correct and still make
profit in the restaurants. 



Fool Says McDonald's Franchisees Are Wrong

I usually ignore articles from the Motley Fool just because I wouldn't use the word "fool"
when naming my company. But, a friend sent this in and it makes some interesting points.
Please note the writer states that Chick-fil-A is the third largest restaurant chain in the U.S. 
That's by total sales, not locations.

Every time traffic is soft at McDonald's writers and analysts start pumping out articles asking "What's wrong at McDonald's" or "Who will fix McDonald's?" I would ask, maybe doing AUVs just under $3 million a year is the best a 14,000 restaurant chain can do? What would Chick-fil-A be doing if they had 14,000 stores in the marketplace?

McDonald's Franchisees Want War on Chick-fil-A: They're Wrong -- The Motley Fool
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July 2, 2019

Speaking of Former USA Presidents and Fake Food

Mike Roberts was President of McDonald's USA until 2006. After resigning he moved 
forward with his theory that Americans were ready for a "healthier" restaurant menu.

LYFE Kitchen was launched with one store in Palo Alto CA growing to 15 locations 

scattered around the country. The chain went through various ownership structures and Roberts was bought out/forced out somewhere along the way. 

Most of the locations have since closed leaving three LYFE Kitchens operating in Chicago.

The owner says they are doing great but who knows?

Proving once again that the market for "healthier" restaurant food is largely a mirage.


Wikipedia on LYFE Kitchen

Under New Ownership, LYFE Kitchen Lives On - QSR magazine
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June 25, 2019

McSpin At Its Finest

This is amusing. McDonald's media people can pull any number out of their hat and no 
one can prove them right or wrong because they control the information. But, the announcement got huge global headlines and most articles inferred that overall sales at McDonald's are exploding, not just Quarter Pounders. Actually pretty clever (and amusing).

McDonald's Has Sold 40 Million More Quarter-Pound Burgers - QSR mag
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June 24, 2019

The $4.7 Million $$$ Man

Compensation Information for President, McDonald's USA - Salary.com
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What is a Pajama Boy?

A few people have written to ask about the origin of the term "Pajama Boy" 

In 2013 the Obama administration launched a website to encourage millennials to sign up 
for Obamacare. Their website featured a picture of a young man who was apparently the model of the new American male (as defined by liberals). The internet went crazy and 
many modifications to the photo were circulated.

We offer the original pajama boy here but your search will yield some clever changes.



June 14, 2019

Beyond Meat is the Latest Bubble Stock

Beyond Meat is the latest bubble stock — have fun while it lasts - MarketWatch
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Whataburger Has New Majority Owner

This is going to be interesting to watch. At over 800 stores Whataburger is large enough
to get the asset-lite treatment from their new owner.

They have very few franchisees and boast that the chain has been "family owned and operated since 1950". The new owners can begin to recoup their investment by refranchising stores at any pace they choose. 

If they are planning aggressive growth the franchisees will fund that growth.

The chain has a history of erecting funky buildings. Many of those may need remodeling
or replacing.

The dining rooms are festooned with pictures of the chain's past including pictures of the founders. Those will have to go in order to make the chain "modern and progressive".

In other words it will be the same strategy used to reformulate Burger King and to some 
degree McDonald's. Stay tuned.

Whataburger Sells Majority Interest to BDT Capital Partners - QSR magazine
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Price for Former McDonald's HQ Revealed

Purchase Price for Former McDonald's Headquarters Revealed - Oak Brook Patch
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June 10, 2019

Real Burgers vs. Fake Burgers



Click to Enlarge
The third and fourth lines of data are the most interesting. We get less cholesterol with 
the impossible Whopper but pay with more sodium. Everything else is about the same.
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June 4, 2019

Food Militants at Work

I haven't known many vegans but have seen enough to know they are typically fussy 
people who can't stop themselves from criticizing other people's food choices.

Such people won't get invited to my backyard barbecue and QSR Operators shouldn't
want them in their restaurants.

A 5-Year Quest To Put A Plant-Based Burger On The McDonald's Menu
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June 2, 2019

In Case You Missed the Q1 McEarnings Call

"McDonald’s is especially thriving with technology and facility investments. The company announced that it had completed 400 updates in Q1, and planned for 2,000 in 2019 with another 2,000 in 2020 as it nears a complete the Experience of the Future update. CFO Kevin Ozan said it’s starting to move the needle.

“We are now seeing an overall net positive contribution to comp sales from our aggressive modernization efforts,” said Ozan during the Q1 earnings call. “This means that the sales lifts from completed projects now exceed the downtime impact.”

Here's the article from Franchise Times
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A 5-Year Quest To Put A Plant-Based Burger On The McDonald's Menu

A 5-Year Quest To Put A Plant-Based Burger On The McDonald's Menu

Oak Brook Is Moving Ahead Without McDonald's

$500 million development on McDonald's Plaza site in Oak Brook gets final approval
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