March 2, 2019

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. 
.

22 comments:

Anonymous said...

What is in it for MCD or Uber Eats to make the franchisees happier about delivery? Uber Eats took MCD to the cleaners in making the deal when MCD should have gotten all it wanted. It was the 800lb gorilla in the negotiation with ALL delivery companies. Why didn't it drive a harder bargain? BECAUSE MCD DOES NOT CARE ABOUT OWNER PROFITABILITY. I don't see how that has changed.

Uber eats doesn't care who pays its fees, whether it is MCD or the customer. MCD gets extra fees and rent on the deal. Stark reality on the economics.

Anonymous said...

Since I know McDonald’s Leadership reads this blog, I thought I would give 2 thoughts on how to get out out of this delivery quicksand.

1). Just STOP taking Rent & Service Fees from any delivery fees. Only take it on Products sold. That would still allow the Owners a Profit that is fair and in conjunction with the Spirit of the Franchise Agreement.

2). I heard a GREAT idea at BLS from a fellow operator. McDonald’s should allow 12 months of NO Rent & Service Fees on a Huge & Unique Undertaking like; 24 Hours and Delivery. This would only apply to the initiative dollars. It would allow the Operators to drive the heck out of the initiative and figure out how to do it well. McDonald’s would make far more on Year 2 going forward than they could have imagined. This would be like them asking us to do unprofitable Discounts to build Guest Counts. Also, everyone would be working together to “Make McDonald’s Great Again” (MMGA)

In both of these thoughts, McDonald’s Leadership could spin it to look like Hero’s, while at the same time giving us the life line and respect we are seeking.

Richard Adams said...

Your #2 is a good idea and it makes business sense. Therefore it wouldn't work in a publicly held company.

McDonald's management has to keep shareholders excited about what's going to happen short term. Shareholders wouldn't be too excited about waiting, say, a year for an initiative to roll out nationally and then wait another year for the initiative to start contributing to corporate earnings.
.

Anonymous said...

How do you know McD's leadership reads this blog? I highly doubt it and they could probably care less about this blog, that would mean they care what O/O's say. McD's leadership has their own agenda and they will push as much though as they can and deal directly with the NFLA not what they would read on a blog.

Richard Adams said...

Frankly, I don't give a rat's rear end if MCD corporate visits this website. This site serves my interest, that of McDonald's Operators, and it's interesting to reporters and Wall Street analysts. I know this because I get get frequent questions from them when you guys use unfamiliar terminology and acronyms.
.

Anonymous said...

Great ideas and discussion. Part of the problem, in my opinion, is that you cannot see transaction level data for uber delivery.... So if you were just using averages on your sales it won't work.(17% fees) you need to see the pmix and cost of each item sold to see it's profitability. (if there is any) the problem is, if MCD is going to move forward with this initiative -- we are a part of a "system" and the system is not delivering the tools necessary for it's franchisees to make educated decisions. also, the new training programs are a joke. I'm not sure training is even happening -- other than through station guides. It doesn't seem, to me, that Mcdonald's is providing adequate tools are resources. And that's simply what a franchise is. And as a franchisor -- mcd should deliver on this training.... if you're going to treat me like a useful idiot -- they should at least give me an OT manual illustrated in Crayon.

Anonymous said...

If reporters are really reading this then why is there not more publicity? Howard Penny’s interview was amazing, but after the NOA formation I thought the media would go crazy. I’m disappointed it has not. Until leadership feels it we won’t get anywhere. And the only way they will feel it is bad press and stock price fall.

Richard Adams said...

More publicity? What are your expectations?

As I wrote above, the issues with McDelivery have been very well covered. The formation of the NOA has been mentioned in every article (I believe) about McDonald's since the Tampa meeting. I think the only place the NOA is not mentioned is in McDonald's corporate press releases.

And that's all without the NOA having a press relations function.

Howard's interview is not really newsworthy because he's one analyst with one point of view.

Back to the NOA, while it gets great coverage reporters are not all that surprised that McDonald's would have an independent franchisees association. Most of the reporters who cover McDonald's also cover other restaurants or franchised chains and almost all of those chains have franchisee associations. So, while an association in the McDonald's system is newsworthy it's not a bombshell. So the media covered it thoroughly but did not go crazy.

As for the stock price - one thing I've learned operating Franchise Equity Group is that it's impossible to predict the impact of negative headlines on the share price of any company. If we could predict such things we'd all be richer. And even if the stock price falls we can't know what impact it will have on management. Look at how long Jack Greenberg was allowed to hang on.

So don't look for the media to cause turnover at corporate. That will depend on two things
1) USA Same-store sales & 2)Earnings

Having said that, the best thing that could happen to the McDonald's system is open and honest communication between McDonald's Operators and the analysts who cover McDonald's. I've been encouraging such communication for years.

But even then, it's not about the share price. I've logged thousands of hours talking with Wall Street analysts and not once have we discussed the share price. That's their job to make their guesses. They don't ask and I dont volunteer.
.

Anonymous said...

NOA needs a PR firm.....I will gladly pay more dues to ensure we are adequately funded.

Richard Adams said...

Waste of money. A PR firm would never understand the legal issues or the operational issues.
There are many, many McDonald's Operators who could perform that function. There are only a couple of dozen reporters who they'd need to get to know. Reporters want to talk with real Operators, not phony PR people. It's just time consuming.

Anonymous said...

The blog and NOA are read by management and stock analysts, as well as shareholders. Trust me, stock investors what as much information as they can get.

Also, the NOA formation is welcomed by many analysts and stockholders simply because of the depth of operational skills of the members versus that of corporate (slim and getting slimmer as the refrain chasing program and store closure program continue). Investors know that the value starts with operations, not with financial engineering. Buybacks and dividends are nice, don't get me wrong, but without ops they can only continue for so long. I'd actually like to see more buybacks as a shareholder because they raises the value of my stock but do not trigger a taxable event like dividends do. They do zero for unit level ops though, which is why NOA forming is an important event.

Richard Adams said...

To the anonymous person who sent in the Google Docs form - I need to know more before I post such an item.

Let's discuss by Email: adams@fegroup.com

Anonymous said...

Chris Ks motto is "Profits for me,but NOT for thee"

Modern & Progressive


MMGA

Join the NOA !

Anonymous said...

To the Anonymous Poster that asked how I knew leadership read this Blog, because I use to be in Leadership and read it. Do not be fooled we all want as much information as we can get, no matter what side of the fence we are on.

Thanks Richard for providing the Vehicle!!!

Anonymous said...

That's interesting that the leadership reads this blog. This is the only place I know of where these issues are honestly discussed, so maybe I'm not surprised. Where else would we get our real McD news?? Nowhere else to commiserate either

Anonymous said...

Has everyone seen the "revised " rent & service fees on delivery schedule. IT will NOT help many stores at all. Hardly a compromise or concession from MCD. Our "partner" is still screwing us royally.

Anonymous said...

MCD will NOT waive fees and rent on delivery costs. They must answer to whom they really serve, and that is Wall Street, not owners. They can't explain to the people that set the value of their stock options why they willingly took a loss on revenue they already forecast without the stock price taking a hit.

Analysts will know that they forced the owners into footing the bill and won't let them share the costs when they know that management doesn't have to do it.

If management does make any move on that direction, expect there to be a hand in your other pocket, like with forced discounting in restaurants when customers buy McCafe products in grocery stores. They simply can't let the revenue just disappear

Anonymous said...

Buying a McDonald’s restaurant in today’s current market place is to be viewed like buying a car. It deprecates as soon as you sign the papers and take possession.

Anonymous said...

As I said, MCD management will do nothing to help operators on delivery economics. Their offer of a "rent cap" is nothing. It won't help me or anyone that I know.

It's an insult. They are just verifying that they think that we are their employees and dopes that are to be ordered around or pushed out of the system.

Anonymous said...

I agree completely with Richard that paying a PR firm is a waste of money. NOA has all of the press it possibly could have gotten. Remember that while this is the #1news to us, it is a footnote to the rest of the world that hangs on every tweet coming from Pennsylvania Ave. We are the next Big Mac and fries run attention space to the public. Never forget that. 95% of the public couldn't even explain what a franchise is. SEIU PROVED this by making up a completely fictitious story to get Joint Employer done. People are so uninformed about franchising in general that they got away with it. If you are paying $15 and hour min wage, I'm not sure how you miss that even legislators are uninformed about franchising-or they don't care and will sacrifice our livelihoods for a few hundred extra votes.

Money better spent, and we are very likely to get it for free or a nominal sum, is putting a feared franchisor betting litigator on retainer. That will get the attention of shareholders and analysts. Those people would love to be named as the attorney for McDonalds owners and would be busy promoting that.

I'm not saying to sue MCD, not unless we have to and if things continue without MCD paying heed to Blake and the rest of NOA leadership's business points about our bottom line cash flow we will at least be ready to rock and roll.

Anonymous said...

McDonald’s Corporate leadership doesn’t understand how franchising works either.

Richard Adams said...

Thanks for agreeing on the issue of PR firms and if you find that "feared franchisor litigator" please let me know.

I say again, if there were to be a public outreach there are hundreds of talented and articulate McDonald's Operators who could be the spokespersons for their fellow Operators.

It's not about spinning things, it's not about manipulating those in the media. It's about telling an honest, transparent story about being a McDonald's franchisee.

Here's an idea - two McDonald's Operators - one handles print and online media relations, the other does the TV and radio interviews. The Operator who does TV has to be in or very near metro areas that have satellite uplink studios. The other just needs cell phone bars.
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