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April 19, 2020

Volcano Aftershocks

McDonald’s Firm Grip on Real Estate Should Help in a Crisis

Inc. Opinion on Joe E's letter
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11 comments:

Anonymous said...

MCD has a stranglehold on real estate and makes a ton from it. Meanwhile,Joe E whines MCD assets are "finite" and hangs operators out to dry. The system is DEAD

Anonymous said...

Before I say anything, I am a small operator (less then the 9 per organization which is the national average) and am responding to this anonymously. Because just like everyone responds to these for fear of retaliation of the corporation, I feel the fear of retaliation of my fellow owners.

I am not 100% happy with McD response. But do we really expect McDonalds to forgive rent and service because of this crisis? Because we are hurting? They are a HUGE corporation and have a ton of resources. Maybe too much overhead. Probably too much. But our business is based on percentage. When the whole system that is actually open is down 30% they are hurting too. They may not feel it because they are employees. My friends who don’t own businesses don’t feel it either but a small business will feel it. But we are in a business relationship with McDonald’s. Let’s not forget it. Our rent and service is a “bill”, it’s an “Accounts payable”. We are not asking our lenders to abate our Principal Payment’s are we? So why do we ask McDonalds to forgive us on our rent and service. Now we need to figure out a repayment plan because all in one month is unacceptable. If we want to scream about something that is wrong, let’s scream about that. It’s not going to happen, nor would I expect Rent to go away. Just like any vendor, no matter how close the relationship is, would forgive monies due. But McD needs to have a fair way to repay deferred debt. Service fees should probably be reduced but not completely. We are paying for supply chain to get gloves, thermometers, and keep our inventory or soap and sanitizer. That is a service to us. The GR team spending countless hours lobbying for us on Capital hill is a service. Let’s have a reasonable position, not what we are expecting. Ray may have done that for us but it’s a different world. Let’s deal with what we have, not what we wish we had.

Secondly, Joe is the the US President. Not the CEO. That is a CEO decision because he is the one ultimately accountable to shareholders. Joe E is the messenger. Let’s not forget that Chris K has screwed us once, he is doing it again. I don’t think we should not pay rent, but it would have been nice. And we never can expect Chris K to be nice. He has manipulated and screwed us from the beginning. Joe E is cleaning up the mess. He is trying to fix the relationship. Chris K ignored the NOA, Joe is actually acknowledging, in writing, they can have a relationship. That is a great step. Why are we ignoring that? At the end of the day, the only honest thing I have heard Spero say is we all will hurt from this.

The PPP will be all we need. We need to focus on that. When I hear on calls that 50% of operators filled out the form wrong for the loan, that’s shame on us. Let’s move past this and fight for what we can and appreciate that we finally have a US president that might give a damn about us. It’s been a while so it will be nice.

Anonymous said...

Why renew or join with NOA, if you don't feel strongly already?

NFLA Chairman Mark Salebra said it best when he recently stressed the importance of collaboration amongst Owner leadership. He stated that NOA was "the indispensable conscience of the system." That's because Mark understands what many of you do directly or inherently.

The creation of the first ever, independent, self-funded organization of "owners serving owners" and not reluctant to take the difficult positions when others cannot has been the single most important development in Owner Advocacy in McDonald's history. The difference in Owner influence and Owner-Led initiatives to rectify the unfortunate developments over the past two years starting with the break in the culture of collaboration, to new contractual agreements that depleted the "Trust Bank" is a tribute to all who worked so hard. Those that have been engaged in the trenches know exactly what happened and the importance an aggressive NOA was to making progress. Most every Owner Leader, in the multitude of Owner leadership groups, helped form and is a member of NOA.

While we are excited about being a positive results-oriented organization, focused on supporting the Owners Led, Company supported agenda make no mistake the work of the NOA, aligned with all elected groups is far from over. Change management is much bigger than one person or one policy. The advocacy agenda for all Owners is long, complicated and far from resolved. Our Owner leaders are working together like never before to address the serious challenges that exist both internally and externally and NOA will be supporting and engaged every step of the way, especially when strong independent leadership is warranted to accomplish key objectives.

As you consider membership we encourage you to keep in mind the overall Vision & Values (https://nationalownersassociation.com/pages/mission) on the site and summarized below.

NOA Prioritizes the Culture & Relationship: Soon, we will be talking to you about specific Owner Leadership priorities and NOA's role of supporting them and other NOA platform issues. Most important we will be working on the priority of the relationship and continuous improvement. The powerful Declaration nearly 800 Owner Leaders signed at the Dallas meeting rejecting the intimidation tactics throughout the system towards Owners who expressed independent or contrary positions, who joined with NOA on critical issues or who dared challenge the "one size fits all" form of management that became systemic sent ripples through the system. It showed the power of the Owners when we unite. We have to help new management understand where it is still pervasive and counterproductive to his stated ideals.

NOA Supports the Mission Critical Issues of NFLA & All Owner Groups: We also know we will need all the support we can get on the next iteration of our BBV agreements, EOTF, Franchise Relations, including Next Generation policies, SBO's, the understanding and costs of new technology, ensuring proper competitive sourcing rather than sole-sourcing that drives up costs, overall System Economics, what are we going to do on employment and People issues and that's just the initial list of issues requiring NOA's support as part of the broader team.

As we close we encourage you to view the highlight video (https://vimeo.com/user19547536/review/373974337/31bc41a821) from the NOA 2nd Annual Meeting...for those in attendance it is a trip home to a company and culture they love, thrived in and want to continue. We believe it helps express the vision we all share of the McDonald's we joined and have had so many wonderful memories and opportunities throughout our McFamily Life.

Thank you for your consideration and to renew NOA
https://nationalownersassociation.com/pages/join

Anonymous said...

https://app.hedgeye.com/insights/83506-a-letter-to-mcdonald-s-ceo-chris-kempczinski-mcd-best-idea-short

Anonymous said...

To the second "operator" post above.
Thank you Chris K!

Anonymous said...

To the second operator above. I can respect your opinion but you are factually incorrect. There is better than 15% of the restaurants around the country that are down 50%, 60%, 70% etc. with organizations down 40% and 50%. Many of these sites the operator will lose a lot of money even after only paying a percentage rent and McDonald's on some of those sites might lose nothing or very little after paying their lease. You are fortunately in a very good position or area but that might not be for everyone. I can agree with you if the operator loses $20k and McDonald's loses $20k then probably nothing should be done. As for PPP there again you are incorrect if a restaurant is down 50% they will not be able to have the money forgiven as they will have a very difficult if not impossible task of hitting FTE for the benchmark period. McDonald's needs to look at restaurants and operators on a case by case basis and have some guidelines.

Anonymous said...

If Mcd didn’t step up I would like to see a 1% reduction in my service fee and have those monies funnelled to operators that are hardest hit. I’m in California. March down 18, April MTD down 12. Yesterday flat. TC’s off 20 but A/C up 20.

Anonymous said...

Anyone down 18% March, April MTD 12% and recovering should be very thankful, O/O's organizations out there down, 30%, 40% & 50%, and more during those same time periods. Your PPP money will most likely put you in a better position financially than if you would have been flat or positive a few percent.

Anonymous said...

Anonymous said...”Anyone down 18%.....”

Thanks for information Spero.

Anonymous said...

I am not sure how much PPP will help me but my organization MTD in April is down
$ 38% and 47% TC's

Anonymous said...

The bifggest help would be to allow price relief. Allow us to charge more than $1 for a,coffee and other drinks and more than $2 ROR espresso drinks.

Someone at MCD headquarters is married to the mandatory discount and this is the only explanation for why we we forced to do this in a pandemic end. Most competition so closed and those still open charge, and GET, double o trip,emphatic for the same product. If you're at a Starbucks, you are paying Mayer 4 -5 times that price and waiting more than 30 minutes for it.

Find out what cubbyhole this person is bunkered down in protecting his or her let prgram and fire that person. Let them go infect a competitor with their money loss virus.