Forbes says:
"McDonald's can opt to absorb costs
rather than risk losing customers to
price hikes since its international
sales have been so strong lately".
This would indicate some cost shifting
back to MCD Corp so Opeators can offer
"value".
Forbes article is HERE
ChiTrib says Alvarez says:
"in today's environment, we can't pass on all our costs"
"The dollar menu is a key component and is not something
we will be moving off of"
ChiTrib article is HERE:
Please note that the above ChiTrib article mentions
our world famous Owner/Operator surveys!
.
May 22, 2008
Newflash! - McDonald's will not pass all costs to consumers
It's shareholder meeting day so there will a
lot of silly headlines like this. Of course
we know McDonald's Corp does not set prices
for franchisees so this must mean just McOpCo.
Reuters story is HERE
The company said it remains committed to its low-price dollar menu:
"The menu (double cheeseburgers for $1) has
been popular with cash-strapped customers
and has helped drive traffic to stores,
which has helped to mitigate margin pressure
from commodity costs."
Oh, really ???
.
lot of silly headlines like this. Of course
we know McDonald's Corp does not set prices
for franchisees so this must mean just McOpCo.
Reuters story is HERE
The company said it remains committed to its low-price dollar menu:
"The menu (double cheeseburgers for $1) has
been popular with cash-strapped customers
and has helped drive traffic to stores,
which has helped to mitigate margin pressure
from commodity costs."
Oh, really ???
.
May 20, 2008
Deutsche Bank Accepts Mediocrity
If you ever ask yourself, how can McDonald's push for a
national roll-out of McCafe when the sales of specialty
coffee have bee so unimpressive?
The answer is that Oak Brook thinks on a chain-wide scale
with little regard for the individual store. This is the same
logic Deutsche Bank uses to place a conservative "Hold"
rating on Starbucks.
Deutsche calculates, based on test markets, that McDonald's
could sell 30-40 units/day. That's enough to hurt sales at
Starbucks on a national basis.
So it's not about profitability for the individual store - it's
about the brand - and attracting investors away from other
brands to buy McDonald's shares.
Deutsche Bank article is HERE
.
national roll-out of McCafe when the sales of specialty
coffee have bee so unimpressive?
The answer is that Oak Brook thinks on a chain-wide scale
with little regard for the individual store. This is the same
logic Deutsche Bank uses to place a conservative "Hold"
rating on Starbucks.
Deutsche calculates, based on test markets, that McDonald's
could sell 30-40 units/day. That's enough to hurt sales at
Starbucks on a national basis.
So it's not about profitability for the individual store - it's
about the brand - and attracting investors away from other
brands to buy McDonald's shares.
Deutsche Bank article is HERE
.
May 17, 2008
Five % Royalties?
McDonald's Owner/Operators in the USA will find some
interesting numbers in the McDonald's 10-Q published
May 6th. Ever wonder what your fees to McDonald's
would be if you owned the land and building and simply
paid Service Fees?
As you'll recall McDonald's sold its businesses in 18
Latin American and Caribbean countries. They sold about
1,600 restaurants.to a developmental licensee that now
owns the business, including the real estate. The buyers
pay monthly royalties commencing at a rate of 5% of
gross sales.
When comparing this to the fees you pay don't forget to
include your Service Fees which are essentially royalties
by a different name.
The first quarter MCD 10-Q is HERE
.
interesting numbers in the McDonald's 10-Q published
May 6th. Ever wonder what your fees to McDonald's
would be if you owned the land and building and simply
paid Service Fees?
As you'll recall McDonald's sold its businesses in 18
Latin American and Caribbean countries. They sold about
1,600 restaurants.to a developmental licensee that now
owns the business, including the real estate. The buyers
pay monthly royalties commencing at a rate of 5% of
gross sales.
When comparing this to the fees you pay don't forget to
include your Service Fees which are essentially royalties
by a different name.
The first quarter MCD 10-Q is HERE
.
May 12, 2008
SSS vs TCs
Our Owner/Operator surveys have
historically focused on Operator
comments and gathering some sales info.
To keep things simple we have not tracked transaction
counts. But, when studied TCs were usually a few
points behind the % increase. If the same store sales
increase was + 4% the TC increase was usually around
+ 2%. Expressed as percentages these are apples and
oranges but at least there was a trend for comparison.
This was obviously caused by menu price increases
and the resultant increase in average checks.
In what looks like a seismic shift TCs in many areas
have flip flopped and are increasing ahead of sales.
This can only mean more customers are moving to
the Dollar Menu.
So we are gathering Operator feedback on this topic
and will work to develop a simple way to include TCs
in future surveys.Please make a comment here or send
your thoughts to: adams@fegroup.com
.
May 10, 2008
Article Grinds Up McCafe
Crain's Chicago Business is running a
comprehensive article about McCafe titled
"McD's coffee perks slowly"
Owner/Operator Irwin Kruger has the best
quote in the article when he says, "We need
to be convinced that the new product
line is going to give us the lift everyone
hopes it will".
The Crain's website is a subscriber site
so you may need to sign up for a free four
week trial.
Access the article HERE
.
comprehensive article about McCafe titled
"McD's coffee perks slowly"
Owner/Operator Irwin Kruger has the best
quote in the article when he says, "We need
to be convinced that the new product
line is going to give us the lift everyone
hopes it will".
The Crain's website is a subscriber site
so you may need to sign up for a free four
week trial.
Access the article HERE
.
April 28, 2008
April 24, 2008
April 14, 2008
Poultry In Motion
I'm happy that McDonald's has a Southern Chicken sandwich
similar to the Chick-fil-A product. I've always enjoyed eating
at Chick-fil-A but my kids are both allergic to peanuts and the
product is fried in peanut oil. No matter what the "experts" say
a parent who has kids with peanut allergies NEVER takes that
risk. Both the kids enjoy the McDonald's sandwich.
As a customer, the McDonald's sandwich is smaller and the
Chick-fil-A sandwich is too big to even fit into the box for the
McDonald's product. It'll be interesting to see how people in
non-Chick-fil-A markets react to this unusual sandwich.
.
April 1, 2008
ABC News on McCafe
On Wednesday, March 31st ABC's Nightline ran a feature on
McCafe. Now this is pretty much a puff piece as it should be
when McDonald's Operators spend $200 million plus on the
network.
Having viewed the preparation of specialty coffee drinks only
from the customer side of the counter it was interesting to
watch the reporter try to prepare a drink, going through all
of the steps and the correct number of "stirs". If you haven't
worked with this product watch this video and imagine what
happens when you get a drive-thru order for four Iced Mochas.
As a customer and a McDonald's veteran it reminds me of when
we used the original Multimixers to make shakes. If the right
shake was not already in the cabinet the "windowman" had to
leave the front to make their own shake. Assuming the area
was stocked with shake mix and syrups this could take a minute
or more. If you left the shake on the spindle and went to get
another part of the order the shake could well over mix and
destroy itself. Or, you finger spindled the shake destroying
the Bakelite disks and the flywheel that drove the spindle.
In any case, the windowman disappeared from the customer's
view for a seemingly long period of time - not to mention the
customers in line behind the customer being served. The speed
of Direct Draw shake machines was a gift from heaven, especially
since it kept the counter person upfront with the customer.
Aren't Baristas supposed to take care of drink preparation?
Based on my store visits the Baristas are a myth or very few
stores sell enough drinks to afford to staff that position.
The video follows. It's a quick eight minutes.
ABC News On McCafe
.
McCafe. Now this is pretty much a puff piece as it should be
when McDonald's Operators spend $200 million plus on the
network.
Having viewed the preparation of specialty coffee drinks only
from the customer side of the counter it was interesting to
watch the reporter try to prepare a drink, going through all
of the steps and the correct number of "stirs". If you haven't
worked with this product watch this video and imagine what
happens when you get a drive-thru order for four Iced Mochas.
As a customer and a McDonald's veteran it reminds me of when
we used the original Multimixers to make shakes. If the right
shake was not already in the cabinet the "windowman" had to
leave the front to make their own shake. Assuming the area
was stocked with shake mix and syrups this could take a minute
or more. If you left the shake on the spindle and went to get
another part of the order the shake could well over mix and
destroy itself. Or, you finger spindled the shake destroying
the Bakelite disks and the flywheel that drove the spindle.
In any case, the windowman disappeared from the customer's
view for a seemingly long period of time - not to mention the
customers in line behind the customer being served. The speed
of Direct Draw shake machines was a gift from heaven, especially
since it kept the counter person upfront with the customer.
Aren't Baristas supposed to take care of drink preparation?
Based on my store visits the Baristas are a myth or very few
stores sell enough drinks to afford to staff that position.
The video follows. It's a quick eight minutes.
ABC News On McCafe
.