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
.

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
.

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
.

June 24, 2019

The $4.7 Million $$$ Man

Compensation Information for President, McDonald's USA - Salary.com
.

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
.

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
.



Price for Former McDonald's HQ Revealed

Purchase Price for Former McDonald's Headquarters Revealed - Oak Brook Patch
.

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.
.

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
.

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
.

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
.

May 31, 2019

Pizza Hut works to fix its asset problem

While pizza delivery seems to work it's unknown if delivered burgers and fries will work. 

But, it is interesting that both pizza and hamburger consumers are less and less interested 
in dining in the restaurant. Whatever happened to the idea that every McDonald's could 
be turned into a Starbucks?

Pizza Hut works to fix its asset problem
.

May 29, 2019

Beyond Meat's Stock Could Jump 30%

A deal with McDonald's would be a real windfall for Beyond Meat shareholders. I guess
the decision will depend on how deeply McDonald's executives are invested in BYND.

It's been a busy week for Beyond Meat but as far as I can tell no reporter or analyst has
looked into whether a very high food cost product would actually fit on a QSR menu. All
the coverage is about keeping the wacko vegans happy.

Two great ways to waste the OPNAD budget, first, advertise McDelivery. Next, advertise 
fake meat.

Beyond Meat's stock could jump 30% if it partners with McDonald's, analyst says
.

May 28, 2019

This Was Not a Test, It Was a Stunt



BK says St. Louis traffic up 18.5%? Easy to do if you give away enough food and do a market-wide coupon blitz.

Impossible Whopper boosted BK’s foot traffic by double digits
.

Doing Without Delivery

"But more companies are shifting their focus to profitability, getting bolder in their 
 demands in the process."

Why a big Applebee's franchisee may ditch delivery
.

May 20, 2019

More on JACK DT Speed

While franchisees are calling for his ouster CEO Comma sounds pretty smart in this article.

"Comma seemed to suggest that remodeling business for dine-in sales is not efficient, given that the vast majority of customers take their food with them.
“Not only do 70% of our guests come to the drive-thru, but half of the remaining 30% that go into the dining room are takeout customers,” Comma said."
Jack in the Box focuses on speed
.

Wasting OPNAD $$$ ?

McDelivery commercial - delivers happy when you're feeling all those other emotions
.

May 16, 2019

JACK Not For Sale - Will Improve Service

"The overall objectives of these efforts are to make training and execution easier on our crews, provide faster and more consistent service for our guests and deliver more sales and profits for all operators. By the end of 2021, we’re targeting a one-minute improvement in average service time, while maintaining quality, accuracy and friendliness ratings." - JIB CEO

Sorry bud, you're about 30 years late with that objective.

Jack In The Box takes itself off the market - Restaurant Business 
.

BK Parent to Grow Too Fast - Will Fall Down - Go Boom



BK parent company RBI unveils global growth strategy
.

May 15, 2019

Fortune on Uber Eats IPO

"One key to Uber Eats success may be the help it gets from its partners, some of the nation’s largest food brands including McDonalds, Subway, and Starbucks, all of 
which boost the number of transactions with smaller, less expensive orders."

Uber Eats Could Help Fuel a Post-IPO Stock Price Rebound

Wouldn't it be interesting to know how many McDonald's corporate employees are shareholders in the Uber Eats IPO?
.

The Simple Life

Simplifying ADB and phasing out Signature Crafted are good moves. It's great to see 
changes that are actually "Operator Driven". 

I have a suggestion to take things a little further - back off on all the "customization".

There was a cultural shift in the McDonald's system someplace in the last decade when McDonald's corporate people convinced themselves that customers wanted menu variety 
over fast service. It seems to have started with slow service times after the introduction
of Made For You.

I've written often that the dumbest thing I've ever heard a McDonald's corporate person 
say was when a PR person was trying to justify the long lines with MFY ... "Guests don't 
mind waiting longer if they know the meal was prepared just for them". Felony stupid.

Here's an example - using the in-store kiosks - the kiosk is constantly asking you if you 
want to "customize" your order. Maybe some of that is unavoidable (McCafe) but it sure 
could be deemphasized.

I'm suggesting Operators go though the McDonald's operating system including kiosks, 
the McDonald's App, McDelivery, etc. and look for anyplace a customer might encouraged
to make changes to their product.

I'm not suggesting that Operators turn off or turn away customers that want to "Have It 
Their Way". They will always be with us. Just don't encourage them to develop bad habits.

And maybe we'll see less goofy YouTube videos of millennial customers screwing around
with the kiosks.
.

May 13, 2019

Uber Eats is More Important Than Uber Ride Share

"Uber said in its IPO filing, “a significant amount of our Uber Eats Gross Bookings come from a limited number of restaurant chains.” It needs to make these guys happy."

Uber Eats Needs to Deliver More Than Ever - Bloomberg
.

This Vegan Thing is a Lot of Bull


My Sunday paper included a flyer from an organic grocery store (a smaller version of 
Whole Foods) advertising "Beyond Meat" burger patties. Packaged two quarter-pound 
patties (8 oz.) the sale price is $4.49. Yes, that's $9.00 a pound.

Amazon Fresh has the same product but for $5.99 or $12.00 a pound.

Now that's retail and economies of scale will bring that price down but it's going to be
a long time before Beyond Meat or any of their competitors fit into this 2 for $5.00 world.

Vegan items sweep fast food as Chick-fil-A, McDonald's eye options - Business Insider
.

May 2, 2019

Great Discussion on our Featured Post >>>>>>>>>

Big New Profit Center For McDonald's Corp?

The eye opening discussion the NOA started last week about Technology Fees charged to McDonald's Operators is important. Many franchise systems are initially built on selling products or services to franchisees (Baskin-Robbins, etc). 

Other than real estate McDonald's has not tried made a lot of money that way.

But, ironically, that's how McDonald's got started. In chapter six of Grinding It Out Ray Kroc writes about his mindset during final negotiations with the McDonald brothers:

"Remember, I was thinking more about prospective Multimixer sales than hamburgers at that point"

Ray's priorities soon changed but selling equipment or products to franchisees might have doomed the McDonald's system.  If McDonald's gets too aggressive about selling technology services to  franchisees  it will forever change the business model.



Being a McDonald's Operator Keeps You Young

Too old to sell Big Macs? And update on the New Jersey lawsuit.

McDonald’s wants to get rid of franchise owner because of age, lawsuit says
.

Uber Losses = $3 to $4 Billion a Year

No problem, McDonald's Operators can make that up.

Uber hints at brutal delivery market 2019 - FranchiseTimes
.

April 20, 2019

Mize Houser on Delivery

"When you consider it: what other industry puts their handcrafted, perishable product 
 in the hands of someone they don’t know to transport and deliver to a customer? "

How you can make sure your food delivery service doesn't take out your restaurant
.

April 17, 2019

A Glitch in the McDelivery Matrix?

Doing some research on McDelivery I went to the McDonald's website looking for a link 
to Uber EatsThere isn't one. You can search by zip code to see if nearby stores offer
McDelivery. If they do you are offered the opportunity to download the McDonald's 
app. If they don't offer McDelivery you are asked to try again later.

I entered the zip code of one of my old stores and they offer delivery. Next, I checked 
on one of my favorite stores in the Midwest. The McDonald's site tells me that the store 
doesn't offer delivery. Yet, they do - I 've seen the banners in the windows dating back 
at least  four months.

I then went to www.ubereats.com and entered the Midwestern store's zip. McDonald's 
pops up with the correct address and the opportunity to order.

Apparently the McDonald's website is running months or more behind what's happening 
with McDelivery. I wonder if the app itself is that out of date.

It looks like the company wants to control the ordering process and have the opportunity
to offer deals and freebies on the app and they can't do that on the Ubereats website. 
But the Uber Eats and the McDonald's websites should mirror each other in terms of the availability of McDelivery.

Oh well, maybe those customers who get confused will jump in their cars and drive to 
their McDonald's where they will pay less and the McDonald's Operator can make some 
profit.
.

April 16, 2019

McDelivery Continued

It's a good thing that McDonald's Operators are making 
some initial progress in discussions about McDelivery with McDonald's Corp. and with UberEats.

But advertising UberEats on OPNAD is still a bad idea. Especially if the criteria is when 70% of USA stores have McDelivery. That number should be 90 to 95%.

And, even at that, Operators who don't have McDelivery should receive a rebate from OPNAD. And everyone should expect soft sales during 
the advertising of McDelivery

Please take another look at:  Why is McDelivery Just Like McCafe?
.

Jonathan Maze on Delivery and on Karen Garcia

Chains start charging more for delivery orders

"If restaurant companies can’t make profits, many believe they’d be less willing to offer
the service, and that could hurt systems’ growth."
.

April 15, 2019

Karen Garcia Coming Out of "Retirement"

Say what you want, at least there will be someone working at Chicago HQ with a 
solid operations background.
.

April 9, 2019

McDonald's Minimum Wage Shift Frustrates Its Franchisees

An editorial by Ed Rensi - former CEO of McDonald's USA - Forbes 

Rensi ran McDonald's USA from 1984 to 1997.
.

Burger King Tries To Default 37 Franchises

“This is an improper and wrong termination,” Zarco said in an interview with Restaurant Business. “Getting someone to disengage from 37 restaurants because there’s a rat and 
some cockroaches in one restaurant is inappropriate.”

Burger King franchisee pushes back against company’s lawsuit
.

Free Food at McDonald's - Everybody's Doing It!

As of 4 PM ET today 1,755,833 people have view the Aussie kiosk trick on YouTube.
That's a lot of high school and college guys who will eat for free this week.

This raises a lot of questions:

How could this happen?

Why would anyone order a sandwich without the meat patty?

Do you really want those people in your restaurant?

Why is that option even available?

Will this be fixed or do McDonald's Operators just have to swallow the expense?
.

April 8, 2019

Comprehensive Article About Burger King's Recent History

Except for the ownership gyrations, the "turnaround" plan at McDonald's is just a copy
of the Burger King plan.

Whopper Of A Turnaround: At Burger King, The 3G Capital Model Actually Worked
.

Modern, Progessive, and Now With Free Food

Every time I use a McKiosk I ask myself, "Why encourage customization?" It just slows down service times. And now it's going to kill profitability.

People in focus groups or surveys will always say they want customization. But it sure turns off customers in line behind them.

McDonald’s customers discover hack to get free hamburger - Fox News



April 1, 2019

Department of Labor Joint Employer Proposal

The two parties would be regarded as equally responsible for the illegal employment 
actions of the franchisee if the franchisor:
  • Has the power to hire or fire employees;
  • Supervises and controls the employees’ work schedules or working conditions;
  • Determines employees’ pay rates or methods of payment; or
  • Maintains the employees’ employment record
DOL proposes criteria to determine when franchisor and franchisee are joint employers
.

March 30, 2019

Funding The Enemy

Now that the Democrat party has gone full-on socialist will McDonald's Operators continue
to  give them 1/3 of their political donations?

OpenSecrets info on McDonald's
.

March 28, 2019

Minimum Wage - Minimum Thought

I think I've absorbed most of the news on McDonald's Corp's announcement to the 
National Restaurant Association on the minimum wage issue. But none of that news
explains why this change in policy had to be made into such a spectacle.

First, McDonald's relationship with the NRA was not a public issue. I've never seen 
it in the press, never been asked about it by a reporter or an analyst. Never heard a
McDonald's Operator mention it. The bizarre stuff the unions send out or post online 
doesn't mention the issue. If it was a public issue only a few people knew about it.

Secondly, it appears that this could have been handled with a private phone call between
McDonald's Corp. and someone at the restaurant association. Instead, someone at 
corporate made the decision to issue a manifesto and make a public splash.

Thirdly, this hands organized labor a moral victory and they are already asking for more
concessions.

But there's a reason this was handled so poorly...

The corporate culture at McDonald's has been taken over by employees with liberal 
political leanings. One of the traits of liberals is they think that almost everyone 
agrees with liberals and the small percentage of the population who don't agree with 
liberals are best ignored. 

And being a liberal is a way of life. Their political views can't be separated from their 
personal and business lives. This makes it very difficult to make good decisions.

Which brings us to McDonald's VP Genna Gent, the signatory of the unnecessary letter.
Who is she?

She's been with McDonald's for two years. Before McDonald's she did political work for 
the American Beverage Association and before that she was with the State of Michigan 
for ten years as communications director. For most of those years, she worked for uber-
liberal Governor Jennifer Granholm. 

Anyone familiar with Governor Granholm would know that she's the type of political 
leader who wants everyone around her to share her uber-liberal political views. Just like Robert Gibbs had to share Barrack Obama's views.

Like I said, liberals have trouble making good decisions and this minimum wage debacle 
proves it.
.

March 25, 2019

McDonald's Acquires Machine-Learning Startup

McDonald's Acquires Machine-Learning Startup Dynamic Yield for $300 Million - WIRED

$300 million here, $300 million there, pretty soon you're talking about real money.

The real question is, how much will McDonald's Corp. let this company charge McDonald's Operators?

The K. boy says the restaurant cost "will be at a discount from market rates". That's completely open-ended, it's unlikely there is any way to determine market rates.  

If it increases sales McDonald's Corp. will get their ROI, they don't need to look at their 
ownership of Dynamic Yield as a McDonald's restaurant profit center.
.

Restaurants Go On the Political Offensive

New York City Hospitality Alliance pushing back against socialism
.

March 20, 2019

McDonald's Presents at JPMorgan Conference

On Friday McDonald's.CFO spent 45 minutes with an analyst from J.P. Morgan.

I'll never understand why they send out a bean counter to discuss operations and 
marketing, but the analysts share the same type of education so they take him/her 
seriously.

About half-way through the discussion the CFO talks about Operator cash flow and 
for the first time McDonald's has admitted that the Operator cash flow numbers they 
give Wall Street are "pre-debt".   

Here's the Seeking Alpha Transcript
.

March 16, 2019

Poultry in Motion


At the end of February, a memo from the NOA board expressed some frustration with the development of "a better chicken sandwich".

On March 5 a press release appeared on the McDonald's corporate website featuring the "test" 
of "Mighty Chicken" in Augusta GA.

Now, I don't hang out on the McDonald's website very much but I've been there enough to know
that announcing a small market (35 stores) test on a website available all over the globe means 
it's not a "test", it's a done deal.

Local press in the test market? Absolutely. But it's not global news unless all of the decisions 
have been made. I wouldn't be surprised if this product isn't already on the OPNAD calendar.

Otherwise, it wouldn't be on McDonald's global website.

Here's the corporate press release:

Testing Mighty Chicken in Augusta, Georgia - McDonald's Corporation
.

March 9, 2019

News on McDelivery

A skilled negotiator knows to avoid making an initial offer that might be insulting to 
the other party. Best example - a home buyer making an extreme low-ball offer that is 
so far below the listing price that it insults the seller's judgment and their beloved
homestead.

That was my reaction to the proposed corporate rent caps on  McDelivery sales. It
will apply to so few stores that it's an insult to the intelligence of the Operator 
community. And there wasn't any real thought put into it. The majority of restaurants 
are still below 20 McDelivery orders a day so they just double that and make 40 orders
the starting point for rent relief?

At least it's a springboard point for discussion. I like the goal of making McDelivery transactions as profitable as drive-thru transactions. A stretch goal but a good one.

And it's also good to hear that OPNAD is holding off advertising McDelivery. Let Taco 
Bell waste their advertising dollars. 

This weekend's WS Journal contains an article about restaurant and grocery delivery. 
It's behind their paywall so you'll need a subscription to their website.


Here's a pull quote: "McDonald’s Corp. started using San Francisco-based Uber Eats
for delivery in January 2017. In a survey that a newly formed association of franchisees conducted of its members in January, 565 respondents said that delivery is not contributing positive net cash flow to the business, while 198 said it is.​"​