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



BK parent company RBI unveils global growth strategy
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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
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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
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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
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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
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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."
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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.
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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.
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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
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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?
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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
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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
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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
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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.
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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
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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.​"​

Too Many Stock Buybacks? A Debate

"So while franchisors spend billions to make Wall Street happy, they would be wise to 
spend something on the innovation and support necessary to stand out on Main Street."

In the last two years, McDonald's spent more than $16 billion on share repurchases.  

Too many stock buybacks? - Franchise Times - March 2019
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March 6, 2019

Funny or Sad?

It's ironic that while environmentalist wackos are trying to shut down tiny things like plastic straws the restaurant industry is developing more and more packaging for delivery and take-out.

Los Angeles bans self-service plastic straw dispensers

Packaging could be the new differentiator in to-go - Slideshow



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March 2, 2019

McDonald's and Martin-Brower Under Pressure

America's Trucker Shortage Is About to Hit Consumers Where It Hurts - Fortune
.

Making McDelivery Famous

Comments here and in other conversations have suggested that McDonald's Operator 
issues with McDelivery should receive media attention.

That job is done. When there's extensive press coverage on an issue or event I usually 
limit the posts here to one or two articles. In this case it was this February 15 post: 

McDonald's Franchisees Dump On McDelivery

This article originated in Advertising Age which is owned by Crain Communications 
which publishes many business magazines in major cities such as Chicago Business
We can be sure the article appeared in most of their magazines and web sites around 
the country.

Nation's Restaurant news and Restaurant Business covered the issue, both in print and 
on-line. CNBC and Fox News did segments on McDelivery. super station WGN conducted
an interview with reporter Jonathan Maze and it's still in podcast form in their website.

I'm sure that's only the tip of the iceberg since I spent a big chunk of February talking 
with reporters and analysts about McDelivery. I think we can assume that all MCD stakeholders know there's a problem with McDelivery.

Now it's up to McDonald's Operators to deal  with the issue internally. 

In my humble opinion McDonald's Corp. will eventually do away with charging rent and service fees on delivery charges and will do so thinking they've solved all the problems 
with McDelivery. It will be up to the Operators to decided if that's enough of a victory. 
.

February 28, 2019

Howard Penny on Video


Last week we posted a link to a research report from  Real Vision featuring analyst Howard Penny. At the time the only thing was available was the transcript of the discussion.

It appears that Real Vision has unlocked the video portion and even if you read through the
transcript the video discussion is enlightening. It's eleven minutes.

Here's the original post:  Analyst Howard Penny on NOA, Chris K, and McDelivery
.

February 26, 2019

McDonald's Operator Comment of the Week (So Far)

Delivery has to be a balance, and profitability is an issue. However, so is QUALITY - and 
the chargebacks to restaurants because a product isn't meeting quality and accuracy - 
with no ability for the restaurant to challenge that model is simply dumb. Add the complexities of MCD negotiated fees, service charges, etc. - you don't have to be a math professor to realize that McDelivery is a GOLD MINE! Where MCD gets the top line SALES (GOLD) - leaving 
the operator with what's left - the loss (or the SHAFT)

Just like giving capital with $1 ANY SIZE DRINK - just "because". When the closest competitor small drink is $1.89 and their Large is over 2.89. Or $2 McCafe to build the supermarket sales - as the competition is selling for closer to $5

McDelivery worked in Asian markets due to population densities that far exceed even the largest US cities of NYC and LA. Completely different model here in the United States - even 
if these larger markets can get close to the demographics. Still, wasn't that a KROCISM - to Local Store Market (LSM) those sorts of ideas? How is what works in NYC good for a highway market in Kansas? Its not like Asia, where its good in HONG KONG because there isn't a McDonald's outside the limits to be impacted with the expectation of delivery. Unlike the USA, where restaurant saturation fills even some of the most remote travel areas in the country.

Looking to build sales - simplify the damn menu to speed service. Declare MFY dead, as the current production engine is dead in its ability to resurrect service times. How dumb is the system simplification focus, when it cant even ELIMINATE the McDouble - a made up sandwich designed to address food cost when the Double Cheese was removed from the $1 menu?

You just have to sit back and scratch your head at the low hanging fruit - but wasting $$$ and synergy on far fetched projects... or taking years to develop simple projects... like digital food safety.
.

February 23, 2019

Discounting Killing Papa John’s Franchisees

Papa John’s has a franchisee problem
.

Fast Food Franchises Should Offer A Simple Menu - Forbes

Nigel Travis, the CEO of Dunkin’ Brands, regarding a reduced menu stated: “It really started with our franchisees being concerned about how complicated our menus are and how difficult it is to train employees, and find employees as a result”.

Fast Food Franchises Should Offer A Simple Menu
.

February 22, 2019

The Robots Are Coming, The Robots Are Coming!

"Longer lines mean potential customers will look for another restaurant, he said."

If only McDonald's corporate leadership could understand this.

At this fast-food drive-through, the person taking your order might not be a person at all
.

February 21, 2019

A Website Supports ‘McCafe Dividend’

"Sales through retail channels siphon all revenue/profit to McDonald’s Corporate, 
essentially cutting out the franchisees that built the McCafe brand."

McDonalds breakfast: Market is forecast to be worth over $1 billion by 2020
.

Thinking More About McDelivery

Jon Taffer states that delivery customers are different from restaurant customers and 
delivery does not cannibalize restaurant sales.

Of course, his only source for such information would be from the restaurant companies
and the delivery providers. It may or may not be true.

But consider this, other than the pizza companies restaurant delivery has never been 
aggressively marketed. Given the power of OPNAD, if McDelivery is on OPNAD, it's 
easy to think that much advertising will change customer behavior and will cannibalize 
in-store and drive-thru sales.

Restaurant delivery has never seen anything like the clout of OPNAD.

Will McDonald's Operators spend their advertising money to move profitable sales in the
restaurants to unprofitable sales with McDelivery?

Or has McDonald's Corp. already committed OPNAD $$$ in their deal with UberEats?
.

February 19, 2019

More on McDelivery From Restaurant Business





Why restaurants missed their chance to get better delivery deals

Analyst Howard Penny on NOA, Chris K, and McDelivery

Real Vision is a research firm and most of their video and audio products are only available
to subscribers. But, their recent interview with Howard Penny is available to the public 
in transcript format. The "Transcript" button is on the right side of the page.

I suggest you print a copy since they might change the link.

Howard Penny - Not Loving It - Real Vision
.

February 18, 2019

Howard Schultz’s Candidacy Could be Good for McCafe

If Starbucks' Howard Schultz actually runs for President as an "independent" millions of conservatives will boycott Starbucks (many conservatives already do) because they won't support a liberal and he will take votes from Democrats so millions of liberals will desert Starbucks.

Writers Peter Romeo and Jonathan Maze discuss:

Howard Schultz’s politicking is good for restaurants—even if he doesn’t have a chance
.

February 11, 2019

Why is McDelivery Just Like McCafe?

One of the McDelivery articles we posted last week discussed the advertising of McDelivery. 
CEO said, "McDonald’s typically won’t invest in any sort of national marketing campaign
until at least 70 percent of the U.S. system can offer what’s being advertised".

Why is that like McCafe?

OPNAD launched McCafe nationally in April of 2009 when a little more than 60% of U.S. stores had the product. Many major markets did not have McCafe until months after the national launch.

Millions of McDonald's customers were misled and disappointed.

Prior to McCafe 2009 was going pretty well. The year started off nicely with a 1st quarter same-store sales increase of 4.7%. The McCafe OPNAD campaign launched in April The 
2nd quarter of 2009 came in at + 3.5%, 3rd quarter +2.5%, and the 4th quarter was barely positive at + 0.1%.

In fact, the years 2003 thru 2012 were all positive same-store sales years but 2009 was the lowest full-year increase of all at +2.4%. No one can claim that OPNAD prematurely advertising McCafe built same store sales.

So advertising a poorly accepted product that was only available in a percentage of stores pretty much ruined sales momentum for 2009. Most of the money OPNAD spent that year 
was wasted.

If McDelivery goes on OPNAD U.S. Operators should expect soft or negative same-store 
sales for the duration of OPNAD advertising against McDelivery.

McDelivery is different than advertising a new product. It's a service, not a product. I don't recall a time when OPNAD advertised a service. Some markets will benefit, others won't. It makes sense that the New York City area would advertise the service. But, Sioux Falls? Albuquerque? Reno?

And keep in mind, one of the reasons McDonald's management pushes Operators to put something new on national television is to impress investors and analysts. Like McCafe, management has been hyping McDelivery with investors for several years. Once investors
see ads on T.V. it becomes successful in their minds and they raise their expectations for 
sales and earnings. All accomplished with McDonald's Operator's advertising $$$.
.

Comments on the Town Hall?

February 7, 2019

Don't Miss This Operator Comment

Anonymous has left a new comment on your post "McCashin In - Chicago Style": 

Your gonna see board members bailing faster than a Crispy Crème Donut at a Weightwatchers meeting...

Remember. even the Costa Concordia was righted by the proper salvage company.

No one knows the MCD system better than its franchisee's.. as there is no one left in McDonaldLand with knowledge. The entire MCD Field Service in most areas has been vacated to BC's with two weeks HU training, a clipboard and a timing device.

Remember a Corporate structure with no history, is a Corporate Structure with no loyalty - even unto itself. They must now live with the monstrosity they created.

.

Jimmy John's: We Will Never Use Third-Party Delivery

"According to the data, 35 percent of customers who have used third-party delivery say
they have experienced a problem with their orders. Seventy-six said the restaurant was, 
at least partially, to blame for the errors. Ninety-two percent said they expect food deliveries within 15–30 minutes of placing an order. 

Jimmy John’s added the largest delivery services average close to a 50-minute delivery time."

Jimmy John's: We Will Never Use Third-Party Delivery - QSR magazine
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January 28, 2019