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December 30, 2019

Analyst Says....

McDonald's new CEO needs to make nice with franchisees: Fox Business
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22 comments:

Anonymous said...

FAT CHANCE Chris K will listen.

We have a confrontational CEO with NO restaurant experience, and Field First has purged the system of thousands of experienced employees and replaced them with lower paid rookies. Heck I have managers who know more than my Operations Associate! Its stockholders over operators. Our service fees buy us no support anymore.

The ONLY chance to fix this is to JOIN the NOA !!!!!

MMGA
#OperatorOnMCDboard

Anonymous said...

Watch your back(pockets) "Making nice" with the O/O's is going to cost the Owner community a great amount of money and frustration. Also, lets hope they have a good source of supply for the Chicken release. We have recently seen what happens when a product release has overwhelmed the ability to produce. Who can forget the plea to "Bring your own bun"!

Anonymous said...

Hes gonna try to kiss our behinds only because he wants us to spend billions to implement their unproven automation technologies.

Anonymous said...

As detailed in the NFLA call notes , we’re told that as early as February we’ll see a tipping point nationally where cash flow will begin to turn negative. Meanwhile, MCD stock keeps going UP.

Anonymous said...

You mean to say that Cash flow can't continue to comp over construction forever? #mindblown

Anonymous said...

If McDonald's wants to treat the operators as equal partners, they should standardize rent and service fees after the land is paid for. That would help us standardize a profitable national value platform for all. #8.5forAll

Richard Adams said...

That assumes McDonald's owns the land and that's not always the case. The land is often owned by an underground REIT controlled by unknown (unknown to us) parties.
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Anonymous said...

Great point Richard. Does anyone have an idea of what percentage of restaurants land are owned by the company?

MMGA!

Join the NOA

Anonymous said...

Lol... cause you think 8.5 is the answer with the mandated discounting? MCD needs to provide zero rent and service on their discounted promotions being sent down nationally, and provide zero blow back on operators that chose their financial viability over outrageous COOP forced discounting votes.

COOP is a marketing discount opportunity, not a menu discounting and pricing strategy.

Anonymous said...

What exactly does our Service Fee pay for? NOA please define this for us. It's never been a royalty fee, and we are getting less service than ever, more G&A cut from corp and pushed on Operators. If I'm getting less service I should pay less fees. Or at least try to negotiate tech fees into the service fees.

MMGA

Join the NOA

Anonymous said...

Your franchise agreement pays out what the service fees are for. Essentially it is the right to use the name and have the Golden Arches above your store. That's it.

Expect no more from the current management team. They are financial engineers and cash management (NOT at restaurant level, unfortunately) experts.

Anonymous said...

To the poster above. Thanks for you comments MCD troll

Anonymous said...

Please explain what is untrue about the statements. Pull out your franchise agreement first.

Richard Adams said...

Fred Turner used to say that the service fees were a "wash" in that they paid for the operating expenses of the corporation and were not a profit center. However, that would have been back when McDonald's was a growth company and the corporation was growing commensurate with the number of restaurants. When the growth stopped corporate downsizing turned service fees into a profit center.
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Anonymous said...

Not to mention that the service fee percent has increased over the years even though total service fee dollars would have gone up anyway to cover Corporate operating expenses with increased restaurant sales. Definite "stick it to the operator" profit center!

Anonymous said...

Things changed a lot when the first generation of MCD executives began to retire and the MCD "deep state" started taking over. Modest but very adequate regional offices were traded for regional palaces, the MCD bureaucracy grew and new stores were being built that should have never been built simply to generate the fixed fee's to MCD. Read the "base Rent" section of your agreement. Regardless of store volume MCD would always their % rent of whatever they said base sales were set. If sales fell below base rent the effective rent would increase to a point that MCD got their money even if base rent increased to 18% to 20% on an agreement of 8.5%. Easterbrook closed 220 stores that should have never been built. Stores were built to keep fixed cash coming in and operators took it on the chin. If an experienced operator would not take the store there were many new operators that would and it kept the cash flowing.

Anonymous said...

Why should Chris K make nice with franchisees (aka his tenants)? They always just bend over. They may make little noises until they do, but they inevitable do.

Anonymous said...

Everything in McDonaldland today is a profit center, even technology. Where restaurants are now averaging $18-25K in technology fees annually. This is generating more than a quarter of a BILLION dollars of revenue annually off of USA restaurants alone!

$250,000,000+ to develop and maintain NewPOS annually. Think about that for a moment.

Oh, you'll get some bullcrap about R&D cost, yada, yada. Fact is, other brands (Not MCD) have restaurants that allow their customers order products texting an emoji. It took our R&D a decade to develop a process to add the drink to a EVM on the receipt.

You still cant add a table tent number on the Global Mobile App, or use GEO FENCING to activate an order automatically, or recognize the customer ordered using the App at 1 store and arrived at another (and make the automatic transfer).

This doesn't count the added cost of ATOS, AT&T for helpdesk and "network monitoring".

Credit cards fees are so outrageous, that most businesses WORLDWIDE refuse to accept AMEX, and charge 3-4% fees to take other credit cards. Once considered part of "doing business", was easy when credit charges represented 8-9% of the total business sales, now at 50-70% of the business the credit card cost are outrageous. Worse, is rates where comparisons to COSTCO service offerings reflect major savings to rates charged our restaurants. How is it the entire purchase power of the system cannot give a better rate than the offering at COSTCO? Seriously, how is that and why isn't it questioned?

How can a single person on a board have such power to vote these cost to every operator in the system? Why aren't they REQUIRED to gather data, then demand a SYSTEM VOTE for overall approval. When any vote occurs, why is it in this day of technology, the tallies aren't more transparent to the field? Why isn't a certified independent 3rd party vender collecting the votes?

The worse words in McDonaldland today is, "operator lead and approved". Reminds me of, "we are from the government, and we're here to help"!

Anonymous said...

Service fees are a joke. They pay for the use of the brand, and the corporate workforce which has ZERO operational knowledge of McDonald's. To come and evaluate a franchisee with 10, 20, 30 years of operational experience on a Brand Standards Visit to determine the hit on IPUR.

If it blows up, they can eliminate that evaluator, call it a day - and begin the process all over again. Even worse, operators have to absorb the cost for learning the evaluation that will be leveled against them. As ROIP booklets, updated yearly, have to be printed and distributed by the individual franchisee. Sort of like the circus lion, having to purchase the whip, to learn what hoop it will have to jump through.

Anonymous said...

Wort repeating-

Credit cards fees are so outrageous, that most businesses WORLDWIDE refuse to accept AMEX, and charge 3-4% fees to take other credit cards. Once considered part of "doing business", was easy when credit charges represented 8-9% of the total business sales, now at 50-70% of the business the credit card cost are outrageous. Worse, is rates where comparisons to COSTCO service offerings reflect major savings to rates charged our restaurants. How is it the entire purchase power of the system cannot give a better rate than the offering at COSTCO? Seriously, how is that and why isn't it questioned?

Anonymous said...

Also worth repeating

They have carved the Heart & Soul out of this business and ATE it.

They want more kid business, then Fire Ronald McDonald.
They want more family business ,then remove playlands
They want faster D/Ts, then add to the McCafe menu and Add fresh beef.
They want higher Cash Flow, then add Labor to the Dining room to teach people how to use a Kiosk, and do table service.
They want better Operations, then let Operators grow to 20, 30, 40 & 50 Stores.
They want us to give Gold Standard everything, Yet their Communication & Technology is No Standard (total failure)
They want us to give Table Service, yet I would be happy to have people just to give Service.
They want Better Advertising, but Create an Ad Agency from 2 Old Dried Up ones.

Anonymous said...

Thanks for the Shoutout to my ”Heart & Soul Post“ above I wrote early last year. As an Operator I feel just as strong about it as when I wrote it.

Let US as Operators Stand Up and Push Back on the things that don’t make since for us.

Make McDonald’s Great Again (MMGA).