McDonald's Franchisees Have Some Harsh Words for Headquarters

McDonald'sThe franchisor-franchisee relationship can be a heated one, especially when corporate asks the operators to spend more money for one of their initiatives.

At McDonald's (MCD), remodeling investments, marketing campaigns and discounting are touchy subjects right now.

Mark Kalinowski, lead restaurant analyst at Janney Capital Markets, spoke with a bunch of McDonald's franchisees to gauge how they felt about what's going on, reports Scott Hume and Burger Business.

The 30 operators Kalinowski spoke with had some pretty strong words:

• "We are bankrupting the system in the name of 'rebranding' the system!"

• "Major Remodel Projects are wiping out our cash flow and our equity."

• "Cash flow is trending up, but not as fast as McDonald's cash flow is."

• "McDonald's Operators cannot absorb all these costs, do all this discounting, and still pay to remodel our landlord's (McDonald's) building."

One franchisee elaborated:

"Commodity increases along with construction project upgrades are draining whatever cash flow we might bring in. The Dollar Menu has limited our ability to cover these costs by raising rest of menu prices. This has created a huge gap between high- and low-end, driving more consumers down to supposed Extra Value Menu items which have no useful upside profit potential. Next year projected service cost increases (insurance, utilities, tech fees, etc.) are going to be a backbreaker. Just increasing Transaction Counts is not going to work if they are unprofitable ones. We have created a scenario of working harder for less. There needs to be a window of time to just make profits without giving them all back."


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Shawn

Great idea of syncretism and paradigm that might work for all government(s) of the U.S., including Economics of Mcdonalds . But which dept will you send the idea to be voted in?

October 25 2012 at 9:19 AM Report abuse rate up rate down Reply
1 reply to Shawn's comment
Shawn

this was in response to the commenter "Joe".

October 25 2012 at 9:38 AM Report abuse rate up rate down Reply
Fred

Commodity prices going up? What a lame excuse. You can't count that, the government says so. They don't count it in inflation calculations, you can't either.

October 24 2012 at 9:27 AM Report abuse rate up rate down Reply
coochiescooter

Really a dumb article on Mickey d's What's Obama trying to cover up now ?

October 22 2012 at 6:18 AM Report abuse +1 rate up rate down Reply
Jay Adams

Who cares about some scumbag Franchisees who sell unhealthy, bad for your heart food thats not good for man nor beast. If they had any kind of morals they wouldn't be profiteers from Mcdonalds food in the first place. Does anyone think McDonald's has benefited the health
of anyone who ate there? With Mcdonalds, it's profit first, we don't care if you eventually die
from our crap. The franchisees can go to hell.

October 21 2012 at 11:59 PM Report abuse rate up rate down Reply
Joe

I have a very interesting idea, it will save money and time and all of the people in the USA will derive some benefits from this idea. As we all know, computers, cell phones, and electronic communications have not only shrunk the world but especially the time zones in the USA. Why don't we reduce our time Zones from 4 to 3, rename them Eastern, Central, and Western time zones ? Just think, Sunday night football could start an hour early on the Eastern time zone and the Western time Zone would be only 2 hours behind for not only sports programs, but the Stock Market and Wall Street would be able to communicate and function more effectively for those Companies that have offices in the current 4 Time Zones. I am sure we can think of numerous ways that this will save money far more than keeping various offices manned for that additional hour for communication purposes.

October 21 2012 at 8:50 PM Report abuse rate up rate down Reply
1 reply to Joe's comment
stvhndyman

and this has to do with McDonalds how?

October 22 2012 at 2:35 AM Report abuse rate up rate down Reply
ps7603

Still taking bets that Obama will win!

October 21 2012 at 7:46 PM Report abuse rate up rate down Reply
1 reply to ps7603's comment
coochiescooter

Win what ? Even his golf game sucks after four years.

October 22 2012 at 6:11 AM Report abuse +1 rate up rate down Reply
Jacqueline

It really depends on the franchise. For example, our Keene, New Hampshire McDonalds franchise owner keeps his nephew as a manager. The owner knows his nephew has all cashiers steal from the till daily for him to buy oxycodoneandpercocet under fear of termination. Yes, I know this first hand. You can't tell corporate because when you try to leave a message on thier website, its conveniently broken and there are no numbers to call. So in all fairness, McDonalds cannot afford manager drug habits, training employees to steal, AND upgrades too! Thats just asking too much! Sheesh McDonalds, get with the program!

October 21 2012 at 6:57 PM Report abuse rate up rate down Reply
fkans1

i think all mcdonald need to stop hiring all these mexican because they are talking all our jobs and the people dont like this because they cant understand english and always get their order wrong and why is it that they are cutting american people hours down and giving it all to them

October 21 2012 at 6:08 PM Report abuse rate up rate down Reply
1 reply to fkans1's comment
iamcherrel

How can anyone be so stupid.It has nothing to do with race..............

October 22 2012 at 3:57 AM Report abuse +2 rate up rate down Reply
elmdodge

Sounds like what happened to new car dealers mfg transfered cost's on to them then restricted margins.
Hey no union or associations to protect these smaller one owner franchise operations.

October 21 2012 at 5:32 PM Report abuse -2 rate up rate down Reply
gramps180

Welcome to the world of fast food philosophy. Ever work for one of these businneses and you know what it feels like. i guess the francise are beginning to feel what its like to be on the bottom for a change.

October 21 2012 at 5:10 PM Report abuse +2 rate up rate down Reply