Maze Does Some Math

Some more numbers Owner/Operators don't want to see

Subway to Franchisees - Extend Hours, and Don't Close Stores

Subway has made several new requirements for its franchisees

"All of which has resulted in frequent pushback from franchisees over strategies such as new discounts, extended hours, and even the company’s new slicers. And franchisees often refuse to go along with the company on some of its initiatives, such as digital offers." 

Competitive Corner

Burger King is beating its category by a lot - QSR Magazine

Wendy's new CEO laments the brand's quality degradation - Maze

Coming to a Site Near You

Another factor that will make the third quarter of this year more challenging for McDonald's USA will be the number of new store openings. Historically, McDonald's opens 50% of the year's new stores in the last quarter of the year. It's just human nature to procrastinate and then rush to complete projects by year's end, whether at corporate or at your local building department. 

Of course, these new stores will impact nearby stores' sales for the quarter. Fourth-quarter new stores are either under construction or are permitted and soon to break ground.

One Lap at a Time

As the autopsy of MCD Q2 winds down, USA McDonald's Owner/Operators should give some consideration to the next few calendar quarters. 

The third quarter is not too challenging since the USA was up a few percent in 2025 over 2024. But the fourth quarter will be a real challenge. The same-store sales increase from 2024 to 2025 was 6.8%. That's a tough number to lap.

The years go by fast, and we forget events. Here's what analyst Mark Kalinowski wrote about MCD Q4 2025:

January 27, 2026

"While McDonald’s U.S.’ Q4 2025 same-store sales appeared to have started off slowly thanks to what appears to have been an underperforming (at least underperforming relative to our expectations) Monopoly promotion. However, once McDonald’s started lapping meaningfully easier comparisons from the end-of-2024’s food-safety incident, trends likely improved. In addition, the early December Grinch Meal promotion appears to have been a resounding success. On top of all this, throughout the quarter, McDonald’s seems to be doing a better general job of promoting value to quick-service consumers, or at least it’s doing so notably better than some other large, quick-service burger concepts are. All in all, and based in part on our survey responses, we leave unchanged our +5.2% projection for McDonald’s U.S. same-store sales in Q4E. Sell-side consensus (according to Consensus Metrix) has ticked up to +4.8% in recent weeks."

Will management panic and throw everything against the wall like they did in the recent quarter? Of Course they will.

Will the Owner/Operatrors refuse to go along and only participate in a reasonable amount of discounting and promotion? We will see.

Everyone's Asking: What's Happening in McChina?

From the article:

"As its store count surpasses 8,000, global fast-food giant McDonald's is facing unprecedented growth anxiety in the China market. Despite sprinting ahead at a pace of nearly five new stores per day in the first half of this year, declining same-store sales and an increasingly crowded playing field are putting its "volume over price" expansion logic under severe strain."

McDonald's China trapped in Thousand-Store Siege

We Have a Huge Same Store Sales Problem - Let's Solve it by Opening More Locations

McDonald's slams the brakes on new store growth - The Street

Too Much Marketing Hurt McDonald's

Jonathan Maze does his usual fine job of recapping yesterday's MCD conference call.

Chris K. says: “We don’t have a strategy problem,” he added. “We simply didn’t execute at the level we needed to in the second quarter.”

In other words: There's nothing wrong with what we're doing - we're just doing it wrong. 

McDonald's Admits its Value Meals Have Become too Confusing

McDonald's executives conceded on Tuesday that recent discounting initiatives haven't always worked out and have even turned away some of the restaurant's biggest fans - Morningstar

McDonald's Q2 Earnings Call Transcript

I know few bother with these calls but a lot of the discussion is about the USA - Seeking Alpha

New Pres for McDonald's USA

McDonald's makes a big change in its sluggish U.S. market - Maze

Anonymous Submission on Excessive Discounting

Excessive or frequent discounting often erodes consumers’ perception of a product’s value and quality over time, even if it boosts short-term sales. Price serves as a key quality signal, and heavy or constant discounts disrupt that signal, lower reference prices, and condition buyers to view the product as less worthwhile at full price.

Price as a Quality Cue and Quality Skepticism

Consumers frequently use price as a proxy for quality, especially when they cannot easily evaluate the product beforehand. Large discounts can trigger “quality skepticism.” Buyers may wonder what is wrong with the item that it needs such a steep markdown,  or is inherently lower quality.

Research and industry observations show that discounted products are often perceived as lower quality than identical full-price versions.  Frequent discounting reinforces the association between the brand and lower quality.

Shifting Internal Reference Prices

Consumers form an internal reference price based on past observations. When discounts occur often or deeply, the promotional price becomes the new normal (or “anchor”). Full price then feels inflated or like a loss, reducing willingness to pay it.

Classic examples include retailers whose constant promotions trained shoppers to buy only on deal, ultimately damaging the business when regular-price sales collapsed. Frequency and depth both matter: deep discounts at high frequency lower reference prices .

Brand Equity Dilution and Devaluation

Excessive discounting sends signals of weakness or desperation (“the product wasn’t worth the original price”). It can commoditize the brand, shifting focus from unique benefits, quality,  craftsmanship, to pure price competition. Premium positioning is especially vulnerable—once eroded, it is hard and slow to rebuild.

Loyal full-price customers may feel disillusioned or “punished” for buying earlier at higher prices. Over time, the brand becomes associated with deals rather than value, attracting more price-sensitive, lower-lifetime-value customers who switch easily for better promotions.

Conditioning Deal-Seeking and Reduced Loyalty

Shoppers learn to wait for the next sale, delaying purchases and making full-price periods slower. This “discount conditioning” or promotion addiction raises price sensitivity across the board. Discount-acquired customers often show lower average order values, lower repeat rates, and substantially lower lifetime value

Other Related Effects

Expectancy effects: Lower prices can prime lower expectations, sometimes making the product feel less effective or enjoyable (supported by studies ).

Category-level damage: Aggressive discounting has led consumers to doubt overall product quality and prefer “aptly priced” alternatives.

Sadly, McDonald's has not learned this lesson.

Real Estate Comment From Anonymous

 McDonald's has sold many high-value real estate assets over the last 10 years.

One thing most people don't realize is that these situations usually happen one restaurant at a time, so they rarely get any attention. Most franchisees never hear about them unless they know the operator involved. But over the last 10 years, these sales and redevelopments have become more common and, collectively, have wiped out hundreds of millions of dollars in franchisee equity that operators spent decades building.

Sometimes the franchisee loses the location at the end of the franchise term and all of the equity they had built in that business. Other times McDonald's sells the property, redevelops it, and the franchisee goes back into the new building paying substantially higher rent and operating costs, often with less volume than the previous premium location and lower profitability.

Then there are the relocations, where McDonald's sells the existing property, keeps the proceeds, and builds a new restaurant down the road. None of the money from the sale goes toward helping the franchisee with the significantly higher cost of the replacement restaurant. In many cases, even if sales increase, the store's operating income is lower because of the much higher investment and occupancy costs.

The next concern is sale-leasebacks. We know this idea has been discussed by influential shareholders over the years, and I believe it's only a matter of time before it becomes a broader strategy. It may start slowly, but if history is any guide, it's something franchisees should pay close attention to. Sale-leasebacks have contributed to the decline of several well-known retail and restaurant chains by replacing owned real estate with permanently higher rent obligations. The people who benefit the most are often the shareholders in the short term, while operators are left with higher costs and less flexibility for years to come.

7/31/2026

MCD Real Estate

Several anonymous comments have mentioned McDonald's real estate holdings and the potential impact on the McDonald's franchise.

This is something we need to talk about.

The comments are HERE:

Technomic Expert Discusses Restaurant Struggles

Technomic's Robert Byrne cautioned against adding complexity to operations with new items and limited-time offers

Opinion - CEO & Chair? - Submitted by Anonymous

Combining the roles of Chairman of the Board and CEO (often called CEO duality) concentrates significant power in one person and creates several well-documented corporate governance risks. The structure is widely viewed as suboptimal by many governance experts, institutional investors, and proxy advisors because it weakens independent oversight.

Core Dangers and Risks

Weakened Board Oversight and Checks & Balances

The board’s primary job is to oversee management, including the CEO. When the same person chairs the board, they control meeting agendas, information flow to directors, and the tone of discussions. This makes it harder for independent directors to challenge strategy, performance, risk management, or the CEO’s decisions effectively. Critics describe it as the CEO effectively monitoring themselves.

Conflicts of Interest

Key areas include:

* Compensation: The board (led by the CEO/Chair) sets the CEO’s pay and incentives.

* Performance evaluation: Objective assessment of the CEO becomes difficult.

* Succession planning: The dual-role holder may resist or influence plans that could lead to their own departure.

* Related-party issues or personal priorities: Fiduciary duties to shareholders can      conflict with personal or management interests.

* Reduced Accountability and Higher Risk of Mismanagement

Power concentration can enable unchecked authority, poorer risk management, less transparency, and slower response to problems. Historical governance failures (e.g., aspects of Enron and Tyco) involved overlapping leadership that limited independent scrutiny. Legal risks rise, including potential shareholder lawsuits for breaches of fiduciary duty, negligence claims, or regulatory scrutiny.

Impaired Board Independence and Candor

Directors may feel less free to speak critically. Executive sessions without management can lose effectiveness if the Chair is the CEO. Whistleblowing or internal reporting of issues can also be chilled when the board is management-led.

Succession and Leadership Transition Problems

Removing or transitioning an underperforming dual-role leader is harder because they control the board process. This can prolong underperformance.

Who Says There are Too Many Restaurants in the USA?

Franchise Bankruptcies Continue - Franchise Times

Some Will be Educated, Some Will be Angry

Anonymous submitted a recent YouTube video about McDonald's.

I suppose many McDonald's people will find this video offensive, but he did a good job of balancing out the advantages and disadvantages of the franchise. And he used the FDD (Franchise Disclosure Document) as a source, which means he's read it - something few franchisees have ever done.

And yes, he gets a few things wrong, such as implying that all a franchisee needs to do to get a renewal is pay another franchise fee.

It's good that it's up to date and addresses contemporary issues like price-fixing.

Run time: 38 min +

YouTube video on McDonald's franchise

Taco Bell Needs New Suppliers

Taco Bell to stop buying from Taylor Farms - MSN

Outbreak linked to Taylor Farms - MSN

Chick-fil-A Modernizing Playgrounds

The objective is to create a place of connection - NRN

Taco Bell and the Outbreak

Taco Bell is reportedly being investigated as a potential source of cyclosporiasis outbreak

Congressman Chuck Edwards Sells His McDonald's Franchises

After fifty years - started as a crew person

Lots of good discussion here: Who cares about your P+L?

McDonald's Career Employees Getting the Chicken Finger

Maybe it was over adult beverages after Co-Op meetings, but during McDonald's growth years, Owner/Operators worried that as the company grew, we would develop corporate people who would leave and end up using their McDonald's experience to build out our competitors.

While that didn't happen (with a few exceptions), the PJB regime has done the opposite. He has flushed thousands of experienced McDonald's corporate staff and Owner/Operators while bringing in staff from other chains or people with no experience just because they went to the right schools.

These people will hang around just long enough to pad their resumes.

McDonald's hires Raising Cane's vet to lead development

https://www.linkedin.com/in/bryanbrowncdo/

Jonathan Maze Reviews Prototype McDonald's Store

"After some tweaks, the company expects to open it to franchisees whose restaurants are due for a remodel, or who are planning new locations."

Kevin Hern Headed for U.S. Senate

From Golden Arches to upper chamber - NY Post

Who Cares About Your P+L?

It's difficult to make investors concerned about restaurant profitability. They may be brilliant when it comes to the corporate balance sheet, but still do not understand how sales increases do not always make it to the restaurant bottom line. Or they may be very judgmental about how much a franchisee is allowed to take home. And they sure don't understand it when the CEO talks about " franchisee cash flow" without factoring in franchisee debt service.

So the following article is a pleasant surprise in that it explains: 

"The real question is whether the company's value strategy can generate enough traffic to outrun the margin pressure it creates for its operators".

The real risk squeezing McDonald's stock - Trefis Team

Desperately Seeking Ronald

Much of America has been asking, "Where's Ronald McDonald?"

We've found him at the recent Chicago Pride Parade. The question is, if Ronald is appropriate and fun enough for the Pride Parade, why isn't he appropriate and fun enough for a local McDonald's restaurant event?

Skye and Ronald

Restaurant Closure Update

Restaurant closures are back to 2019 levels again - NRN

How to Find the Brokest McDonald's Owner/Operator

How to find the cheapest McDonald's, wherever you are - allrecipes.com

Maze on Restaurant Industry Trends

When times are tough, little things matter - RestBusi

It's Enough to Make a Pajama Boy Nervous

Blue = McDonald's, Orange = Dow Jones Average 

Your Equity or Theirs?

Few of us are interested in real estate in China, but there are two really profound comments on McDonald's real estate here  >>>

McDonald's real estate in China - (comments)

Once upon a time, McDonald's stores were located with the goal of perpetuity. Historically, McDonald's Owner/Operators have assumed that their stores held equity due to McDonald's real estate practices. Under this regime, that's no longer the case. 

 

The Smart People Live in Flyover Country

Oklahomans reject minimum wage increases - Oklahoma Voice

Restaurant Companies No Longer Want to be in the Resaurant Business

YUM to sell Pizza Hut to private equity - QSR mag

You, You're the Yuan

McDonald's Corp. is harvesting its real estate equity in international markets such as Hong Kong. Let's talk about where these millions show up on their income statement.

The following is provided and written by Grok (the AI service by Elon Musk's X).

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McDonald's Corp. has sold (and continues to sell) several of its retail properties in Hong Kong as part of a broader asset disposal strategy.

Key Details

• Announcement (July 2025): McDonald's planned to sell eight prime retail properties (fully or partially tenanted by its restaurants) valued at around HK$1.2 billion (US$153 million). JLL was appointed as the sole agent for a public tender (closing September 16, 2025). Locations included Tsim Sha Tsui, Causeway Bay, Mong Kok, Kennedy Town, Tai Kok Tsui, Yuen Long, Tsuen Wan, and Tsz Wan Shan.
• McDonald's continues operating the restaurants as tenants under long-term leases, so operations are unaffected. Reports suggested it might divest more of its ~23 owned properties in phases.

Sales Completed So Far (as of mid-2026)

Multiple individual sales have closed, often at strong profits:

• December 2025: A Kowloon property sold for HK$72.4 million (US$9.3 million) — part of the eight-property batch, with total proceeds from four sales reaching ~HK$333 million at that point.
• Yuen Long (three-storey property at Yuen Long Trade Centre): Sold for HK$77.4 million (US$9.9 million) to Acc Investment (originally bought in 1987 for ~US$1.2 million).
• Quarry Bay (Parkvale Place): Sold for HK$110 million to Uni Investment Development.
• Mei Foo Sun Chuen (Mount Sterling Mall): Sold for HK$93.5 million (US$11.9 million).
• Other sales have pushed cumulative proceeds higher (e.g., reports of seven shops disposed of by mid-2026).

This fits McDonald's global strategy of optimizing its real estate portfolio (it has historically owned a large portion of its restaurant locations for rental income and asset value). The Hong Kong sales provide liquidity amid a softer local retail property market while retaining brand presence..

Some Updates on Beef Issues

How screwworms could raise beef prices - The Cattle Site

Will McDonald's be a Family Restaurant Again?

If many Owner/Operators invested in the wrong decor, should PJB pay for changes with corporate capex?

Restaurant chains are turning their attention to families - RestBusi

David Beckham and McDonald's

Shares how McDonald's brings his family together - People

Is PJB Responsible for "Gray and Generic"?

"Over the past decade or so, McDonald’s has renovated its restaurants to make them sleeker and more modern. In the process, it has largely removed playful colors and mascots, sparking criticism that locations felt gray and generic. The company is now looking at “injecting some of the playfulness” back while making layouts airier and more open, according to Jill McDonald, who took over as the company’s chief restaurant experience officer last year."

Wasn't the new decor one of PJB's first initiatives after joining McDonald's?

Customerexperience.com

Vote Until You Get it Right

McDonald's Corporation held its 2026 annual meeting on May 20th. Results of the voting for officers and directors have been published.

McDonald's has 710 million shares outstanding

The typical board member received just under 500 million votes "For" serving until the 2027 board meeting.

There are always votes "against" certain director candidates. Aside from the CEO/Chairman, the average director received 11 million "Against" votes.

The CEO/Chairman received nearly 39 million votes "Against".

Some have speculated that this highly negative vote was a complaint related to the same person serving as CEO and Chairman. Or, it could just be a reaction to the recent performance of McDonald's shares.

Or it could be a reaction to the CEO's oddball behavior on social media and a fear that the CEO is not a serious or stable person.

Source: Edger - SEC.gov

Highlights from Minichart.com

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Anonymous Comment of the Month - May 2026

Unknown commented on "Starbucks CEO Has Blunt Message on Discounts"

May 6, 2026

"Got a call from my Field Office Vice-President - "It looks like your not following the recomnedation of Deliotte pricing on under $3, just wanted to bring it to your attention, your affected pricing is above what it was previously" No S..t, I am already discounting a McChicken a dollar lower than before and explain their whole math to them. I also mentioned just spending close to $50K average per restaurant on Technology and just recevied my new NRBES which is probably over $100k per restaurant and McD's want six month plan to complete. Ok so let's sell basically items under $3, lower a dozen or so other items which items sold now at discount will be over 50% of the products sold, not sure where they think the money will be coming from." 

Starbucks: To AI or not to AI

At Starbucks, pen and paper beats AI

"As the chain suggested, restaurants should consider where AI really adds value—and where it just adds more work." 

But Will He Smear Soft-Serve on His Baconator?

Jonathan Maze on Wendy's new CEO - RestBusiness

Chicago: McDonald's Park to Open in 2028

Given the growing popularity of soccer, this appears to be a good move and should benefit the brand worldwide. Just don't stick the Chicago Owner/Operator with the entire bill.

Chicago soccer club to name McDonald's stadium

FOX News - Chicago

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Speaking of things that are good for the McDonald's brand: Am I just missing it, or is McDonald's USA doing nothing to join the companies celebrating the 250 year (semiquincentennial) anniversary of the United States? I know some Owners are taking action, but where is corporate or OPNAD? McDonald's is a premier American company and should be at the forefront of this opportunity.

I expect the attention to this holiday will be the most intense, beginning with Memorial Day and culminating on the Fourth of July. It's not too late to make some plans if none

exist.

                 

The $20 Million Man and MCD Share Price

Anyone who follows or invests in publicly traded stocks has seen situations where the price of the stock takes a hit due to unexpected results or some news that frightens investors. Very often, the price of the stock will rebound, sometimes the next day, and sometimes back to a newer high. This is a sign that investors have confidence that management has the skills and experience to move the company forward. Without this confidence, the stock price will stagnate or drift lower.

There are many factors impacting the recent performance of McDonald's shares but a major one has to be the embarrassing performances of the CEO on social media. How can one have confidence in such an executive, given his tomfoolery?

Any news about McDonald's universally mentions his hesitations about the food.

This is not the road to recovery for the share price.

Source: stockcharts.com