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April 27, 2021

Caution: McSpin Ahead

Tomorrow (4/29) McDonald's Corp. will release results of operations for the first quarter of 2021. This has been preceded by the usual flood of analyst reports and press articles. But this time there's something missing from the predictions and media coverage.

While most parties expect impressive results there has been little mention of how bad sales were during the depths of the pandemic. Instead, the focus is on what the company is doing this year to build sales. This time it's all about the crispy chicken line of sandwiches. There is little or no mention of "easy comps".

This way management can rattle off a list of their successful initiatives and boast about how well their plans worked for shareholders. The press will ignore the soft comp aspect because it's much more fun to write about new products and the latest social media event.

This creates a problem for McDonald's Owner/Operators in that it will intensify the pressure from analysts concerning the next new product line. In addition, Wall Street will expect McDonald's USA to start opening dining rooms and return to all-day breakfast ASAP
 
Menu creep is about to reurn to McDonald's.

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2 comments:

Anonymous said...

Watch these amateur restaurant executives take credit for the work primarily of the Owner/Operators who have been running the company policies since the pandemic hit last March, the company exec's froze and the entire external world saw Chris K was unable to lead on real restaurant issues and Joe Erlinger was a temperamental mess, he and his financial team dropped the ball at every turn with no real solutions not brought forth by franchisees. Owners took the high road and then took over. Simplification, focus, seeking PPP when it was clear the company would spin externally and do nothing to support Owners internally. They will sadly bamboozle the increasingly unaware analysts. who don't get the damage they did with the new team artificially and financially engineering cost-cutting initiatives few outsiders really understood the ramifications back then. Over the past several years these leaders essentially eliminated most company support (including restaurant experience) services, field support, and have convinced the lightweights from Wall Street that they made great cuts (in other words the company's support ironically paid by Owner service fees that are yet to be reimbursed) and pushed all other costs back on the franchisees. The current recovery, sales, and chicken results temporarily cover up the same problems that existed before the recent success as franchisees worked diligently, mastered drive-thrus during the pandemic, launched chicken, BTW, who pushed the chicken sandwich the company took 2-3 years to develop, fumbled, missing promises and deadlines inexplicably. Is it true they didn't want spicey chicken (way to know your market and growth of Hispanic influence and need for heat, until Owners on the team forced it on them) kept trying to sneak in new items, or prematurely open dining rooms, all naive moves shot down by long term, experienced restauranteurs that built the system and created the plan for such an incredible recovery. How'd the callous, inexperienced execs reward them? Of course with more deceit, more shifting of the costs and chargebacks, and then in the ultimate betrayal, sneaking in a pre-holiday season announcement after feigning insincere collaboration in 2021 planning, the three new cost-shifting assaults on Owners adding insult to injury. Now they are scheming to add new tech fees, charge more service fees they get off topline sales, while Owners pay more and more and the company takes more and more while managing less and less. How many lawsuits exist and the few remaining integrity-filled executives can leave before the Board wakes from their slumber? Who is paying attention? Wait until the salacious lawsuit against Easterbrook plays out like a reality show and discloses who else was involved in the debauchery and perhaps much worse? Will that explain the silence, the constant accounting errors, and more, the failure of paying $300M on AI they ultimately had to admit, and partially reimburse the Owners for, as it didn't even reach minimal goals. Good morning analysts listening to statements to the contrary that duped those asking questions every quarter on earning calls for about three years? Seems those brilliant cheap seat observers paid for their inaccurate insights must be napping with the culpable board. Congratulations to the commitment of all the hard-working Owners who have ignored the incompetence knowing how critical the times were to support their employees, customers, and the brand. These brave men and women have kept the magic of McDonald's alive, even as the small group of leaders does their best, perhaps sometimes unintentionally, but certainly sometimes intentionally to erase the history of America's greatest success story for small business owners. Stay strong fellow leaders, it's working even as the pretenders take a bow. The curtain may not always drop in their favor as you run just a few points shy of 100% of the most successful restaurants in the world.

Anonymous said...

Chris K beat the pandemic! We should all love him and do whatever he says!

Right.

Now that we know operator decisions are what led to the huge sales increases and success, we cannot let corporate shove all day breakfast and tions of slow moving menu items like fake meat down our throats. We showed them how to make money. They should learn from us.

And NO MORE DOLLAR COFFEE AND DRINKS!