From QSR Magazine:
"However, Borden and Kempczinski emphasized that development decisions will be based on returns rather than hitting a fixed unit target.
“We’re not chasing an absolute growth number,” Kempczinski said, noting that locations that no longer meet return thresholds due to rising construction or supply chain costs will be removed from the pipeline."
Not chasing a number? They've been chasing a number since the announcement of "Accelerating the Arches". It's obvious this inexperienced management team, with little experience building stores, is running into snags they didn't expect.
While it's not a scientific measurement, there have been numerous press articles about cities, towns, and communities giving the corporation a hard time about permitting a location. For an experienced McDonald's person, this is nothing new. It's been happening since the 1970s. There's always a group in the area who think they know better, or one or two grey-haired hippies on the local council or planning board. But PJB wouldn't know that.
Using construction costs as an excuse is silly since they can just pass those costs on to the franchisee. Unless they are building a McOpCo, and it doesn't seem they'll be doing much of that.
So, PJB is laying the groundwork for a future admission that he can't make the previously announced goals.
2 comments:
Internationally, construction costs might be a factor where the business arrangement involves the franchisee owning and building on the real estate.
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We've previously discussed the use of real estate brokers or salespeople in identifying locations. These folks will always low-ball a buyer or tenant on how long planning and permitting will take. This will surprise many MCD corporate people.
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