Coalition of Franchisee Associations

January 29, 2020

Wall Street Doesn't Understand Economics

McDonald's shareholders think franchisees can raise prices forever

McDonald's Earnings Top On Best Same-Store Sales Gain In 10 Years - IDB


Anonymous said...

As much as I hate raising my prices, I have to do it to try and recoup the losses from our INSANE discounting!

Anonymous said...

Its the nature of our education system, when corporations can release a pretty picture with a explanation and its simply accepted.

Gone are the days where economics, business law, business mathematics are taught in high school.

The operator field has been wiped of most inflencers that understand local store marketing, building trust bank relationships, social impacts of a brand. Hell, basic P&L financials and ROI calculations are scarce traits.

Honest discussions, are only discussions field officers agree with, and everything contrary to that belief is subversive. Even if subsequantly proven to be benefical to the brand. Its not about the brand with officers having no relationship, or skin in the game.

Anonymous said...

Wall Street DOES understand that raised prices equals a bigger royalty because the top line is higher.

Richard Adams said...

Wall Street doesn't care about the impact on customer counts.

Anonymous said...

Wall Street doesn't care about the impact on customer counts."

The Wall Streeters understand that losing customers is unsustainable in the long run, which is why they keep demanding "value" (extreme discounting) to drive traffic. They know that it drains profitability out of the restaurants, but they don't care as whatever royalty and rent is due goes straight to MCD.

They sell their shares at a profit long before the show finally comes to an end. Just like the Stock Option Suits in Chicago.

They all get very soft landings onto piles of money and move on. Not operators.

Just wait to see what the breakfast discounts and McCafe giveaways will do to operators. All to fisht Wendy's which is going to kill itself with breakfast, again. Why are we going to be joining them in a suicide pact?

Anonymous said...

The situation is dire. The corporation is screwing us. There is only one alternative-JOIN THE NOA

55 cents a day is cheap insurance to preserve OUR EQUITY

Anonymous said...

Operators drove the medium fry off the DOLLAR MENU, as it locked EVM prices. Locking the EVM, forced enormous raises in prices to core items like sandwiches (which already had a low profit margin). A measure taken back when operators knew the business margins and strategies.

Currently, operators locked the EVM with the drink, and pushed it to the brink (no pun intended). In order to sustain it, OPNAD disemboweled the EVM MENU. GONE, like the Supersize. This opened the door for test like BASKET OF FRIES, where we give 2 MEDIUM FRIES at a discount.

Sandwiches are 2 for $5 (2 for $4 Breakfast), Drinks are $1, and now fries are discounted. Ask yourselves, what business is sustainable where the entire stock on clearance?

Operators joined the NOA to address this discounting, and over the last 2 years its gotten WORSE - a lot worse. On average, the GMA has over 17 major discounted items active at one time. Mailers use to be sent once or twice a year. GMA discounts use to get replenished WEEKLY, now most are daily repetitive discounts. Add the OPNAD and COOP promotional items, and the daily SPECIAL (Free Fry Friday) events - and every item on the menu is under discount, each and every day.

Get a FREE MEDIUM FRY with any purchase of $1.00 or more.

Operators fool themselves by raising prices - where these strategies are easily subverted with discounting offers on the GMA or by OPNAD. Raise your Big Mac cost to $5.00? Who cares, its actually $2.50. Competitor sells a large drink for $2.99, so what yours is a $1.00. COMBO MEAL PRICE is now $8.00 - no, $2.50 sandwich, FREE FRY and $1.00 drink.

But wait, they have to buy 2 sandwiches you say - THATS HOW WE WILL GET THEM. Oh, I see - so they get 2 sandwiches ($5), free fry and $1 drink - $6.00, when you were hoping for $8.00 on a COMBO. Who got Who?

Gotta clean your McCafe machine 4 times a day just to keep the thermoblock from seizing and to keep maintenance repair cost down. Now worries, sell it for $2.00. And don't even think of those shake machine issues, they've become a national joke.

$15 minimum wage - no worries, lets discount some more.

Sad part is you have so many new operators that have been conditioned, that having business discussions like this - a open and honest topic in COOP meetings in the past - are now deemed subversive to the brand.

Join the suicide pact? My friends, the entire system has lined up AND DRANK the Kool-Aid.

Anonymous said...

NOA, we need help and we need it NOW!

As bad as it is, it's about to get a lot worse.

Anonymous said...


prior one said if better than I ever could

My prices are so high it is embarrassing BUT I have to do it because of the
labor cost

$2.00 hot chocolate like you - my price for a 16 oz $3.80 - 20 oz &4.00
not customer friendly - they can buy 2 12 oz for 4.00 24 oz total compared
to the 4.00 20oz. BUT I AM FORCED INTO IT

FRIES 1.59 - 2.19 - 2,69 Not right but have to make up somewhere

When MCD started and I was crew don’t remember exact pricing RICHARD can chime in but an ALL AMERICAN (Hamburg - fry & shake was .45 cents) and I was making a $1.00 a hour

Last and most important to me - a CHICK fil a is opening this summer
or fall 3 miles from one of my stores that does 3.2 million - GUESSING to drop 20% or about 600,000 K. - not happy will lose crew as well - no 24 hours closed on Sunday - ECT

MCD already said add labor to my schedule & the one that really pissed
me off was - WE SHOULD RUN DISCOUNTS A MONTH PRIOR AND FOR AS LONG AS SALES ARE TRENDING DOWN - so now CFA is going to open with full margin prices - take some of my people - & I can already discount what I am already discounting

QUESTION for the operators that have a CFA, how much damage did they do to you in sales & staffing. I know one answer is not good for all I just want to get in the ball park so I have an idea.


Richard Adams said...

Ham, fry, drink for 45 cents must have been before my time but I have seen old print and TV ads talking about getting that full meal and getting "change back from your dollar".

These days I'm lucky to get change back from a $10 bill.

Anonymous said...

"Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it."

It's called inflation. and unfortunately is a fact of life.... buy bitcoin and hedge against the madness. seriously. check it out. it's crazy that it's 2020 and we can't transfer money -- outside of a wire -- instantaneously. the world is changing. and honestly, it feels like a lot of other people are way more "wealthy" than me. People in health care, people in insurance, people in investing. The democratization of money has left me with a lot of debt and the hope of building equity. but I'm not sure.

Richard Adams said...

Sometimes I hesitate to approve a post but then I say, What the heck? The above is not an endorsement of bitcoin, it's just someone's opinion.

Anonymous said...

To the Operator asking about the impact of a CFA impact, It depends if there are others in the area at all. If this is the only one it will take about 20% over the year. If there are others it goes down to about 10%. The more unique to the market the more they take.

As it relates to your people, they will get about 4 to 8 of everybody’s. They will pay 20% to 30% more than the effective minimum wage (this is not your states min. wage) this is what the marketplace is paying.

You do need to Strap on your Armor for battle, you will have to love on your team more, you will have to do more LSM, and you will have to do some discounts and play the long game. You need to have your Best Operations on Sunday, This is the day you can differentiate yourself.

Good Luck!!!