Coalition of Franchisee Associations

October 31, 2023

California, A Growth Market?

"CEO of the burger giant, told analysts that the company’s (California) restaurants will take a cash flow hit when wages are raised in the state, but he calls it an “opportunity.” But for whom?

"so let's use this as an opportunity to actually accelerate our growth in California."

This may be one of those things that get talked about with analysts but never comes up again, and management has to build on the myth that McDonald's is a growth company. But, building stores in California - in a state that's losing its middle-class population - is risky business. Unless it's purely an effort to move sales from lower rent and royalty stores to more profitable (for corporate) stores. Suffering through a huge wage increase and then having your sales cannibalized doesn't sound like a lot of fun.

McDonald's believes it can grow in California - Jonathan Maze


Anonymous said...

nobody is mentioning the massive windfall that McDonalds is going to make as a result of the increase in prices needed to be taken by the licensees to prevent CA Owners from going out of business ( in extra rent and royalty)

Richard Adams said...

We will hear some weird, delusional things about California from McDonald’s corporate people. Not only do they not want inventors to think California will diminish corporate profits, but McDonald’s corporate people have a kinship with California politicians.

While 100% of McDonald’s corporate people are not liberal Democrats, it’s pretty close, so the corporate culture is certainly liberal.

When we were growing up, the Soviet Union was used as an example of the failures of socialism. Today, with the Soviet Union gone, several South American countries are used as a bad example. But what’s this? We’ve got an example of the failures of socialist, big government, one-party rule right here, a few miles to the west.

I run into this all the time with members of the press or Wall Street analysts, many of whom tend to be politically liberal. Bad-mouthing the changes in California gets a really negative reaction.

So, McDonald’s corporate people have many reasons for soft peddling events in California. They have to keep their shareholders mollified, and they also want to serve their personal political agenda. There is nothing a liberal hates more than to have to discuss the failures of socialism.

Wait, I’ve got more. Another political factor is the current governor of California, Gavin Newsom. No matter how Presidential politics play out, Newsom is going to be a factor in both 2024 and 2028. No matter how bad things get in California, Democrats will still consider the man who destroyed San Francisco as presidential timber

Anonymous said...

MCD will grow in CA, from increased rent and royalties based on higher prices because of higher waged. Free money.
Not sustainable growth, but technically revenue growth.