Posted on 10/21/2015 10:51:48 AM PDT by Kaslin
I saw a sad but not totally unexpected news item from John Hawkins this morning regarding one of America’s premiere dining outlets… McDonald’s. The House That Ronald Built has fallen on hard times, with some estimates indicating that a significant portion of the franchises are currently insolvent or seriously in the red. The dire warnings from franchise owners are including phrases such as, “these are the final days.” (Yahoo News)
McDonald’s franchisees believe the brand is in a “deep depression” and could be facing its “final days,” according to a new survey.
“We are in the throes of a deep depression, and nothing is changing,” one franchisee wrote in response to the survey by Nomura analyst Mark Kalinowski. “Probably 30% of operators are insolvent.”
Another wrote, “The CEO is sowing the seeds of our demise. We are a quick-serve fast-food restaurant, not a fast casual like Five Guys or Chipotle. The system may be facing its final days.”
More than a dozen franchisees expressed frustration with McDonald’s management, saying that CEO Steve Easterbrook’s turnaround plan — which includes initiatives like all-day breakfast and a shift to digital ordering kiosks — is a distraction from the core issues of McDonald’s, like food quality and customer service.
“The lack of consistent leadership from Oak Brook is frightening, we continue to jump from one failed initiative to another,” one franchisee wrote.
We’ve talked about this here before and it’s been a regular feature of financial news headlines. McDonalds has been losing money right and left and they’ve been dumping massive resources into a seemingly endless array of marketing gimmicks as they try to turn their fortunes around. None of it seems to be working, and the reason may be that they’re not addressing the core issue which some of the franchisees are bringing up: the chain strayed away from their original core mission and the strength of their brand in response to social pressures of the day.
Let’s face it… McDonald’s was never meant to be a fancy, high end eatery, nor were they a health food store. It was fast food that tasted good and people were willing to tolerate all the negatives that came with that deal if the price was right. It’s true that costs of beef and some of their toppings have been going up, leading to pressure on them to raise prices, but that’s hardly the only cause for their woes. Everyone in that market sector is dealing with the same problems. No… what really killed McDonald’s market position was selling out to liberal pressure groups.
I think the beginning of the end can be traced back to 2002 when they buckled to pressure from health nuts and changed the oil they used to make their french fries, cutting the dreaded trans-fats. They tinkered with the formula again in 2007 but it was never the same. Are any of you old enough to remember the original McDonald’s fries? Those things were like crack in a cardboard cup. I could eat two large orders by myself because They… Were… Awesome. Were they good for you? Obviously not. But that’s not why we bought them. It’s not Ronald McDonald’s responsibility to keep you healthy, it’s yours. When they changed the fries they were just awful and I didn’t order them nearly as often.
Later the restaurant felt even more pressure from the health obsessed wing on the left and began “diversifying” their menu to be less trashy. They were trying to sell apple wedges as an alternate for fries and the menu was stocked with salads. SALADS. At McDonald’s. The only lettuce we needed to see during a visit to the Golden Arches was shredded up on the Big Macs. More changes along those lines followed and their brand loyalty cratered.
The problem with adding lots of options is that more food goes to waste since they have to prepare some of it in advance. Sure, people will always say they love more options, but it’s not always economically viable. The Breakfast All Day idea sounded great to me, but if they’re losing money on it then it’s one option too many. So that was their other major issue… too many options. But to combat the problem, they decided to diversify the menu even further and start offering all manner of specialty sandwiches. Some were good and some… not so much. But yet again they were losing more money by having to stock up and prepare even more items which didn’t fly off the heating tables fast enough. And most of this was done in response to reading too many articles in the New York Times.
McDonald’s could still probably be saved, but I doubt they’re willing to risk the backlash from Michelle Obama’s army if they did it. The company could go back to their old school formula. Trim down the menu for starters. You need a hamburger, cheeseburger, the Quarter Pounder and the Big Mac. Toss in the fish fillet and maybe one chicken sandwich. Put the fatty, lard filled oil back in the fry machine. Keep those molten hot apple pies and maybe a few dessert options. Kick the rest except for some seasonal specialties like the McRib. I’m guessing people would come back and your waste costs would go down hugely. You may get nailed with a minimum wage increase, but all your competitors will face the same thing if you do.
It’s a shame to see McDonald’s floundering, but they really brought it on themselves.
When they removed the beef tallow from the french fries, it cost them a fortune. FF are very high profit, and they were bad, like every other Fast food fry.
Extends to the décor of the new stores. If you had never been in one you’d think the one in my neighborhood was some sort of a farmers market that sold high-end gourmet coffee.
McDonald’s profitability would skyrocket if ... Donald Trump ... was CEO ... step # 1 : bring back the “original” beef-tallow french fries ...
Don’t forget about the toy ban in Happy Meals at the San Francisco franchises.
That looks pretty good!
I used to buy their salads before they cut down the amount of chicken. Each time I’d ask the clerk how many salads they sold. Generally, they’d say something like, “we throw most of them away. They don’t sell.”
Tried to satisfy the Mooch and serve healthier food. McDonalds is about salt, fat, filling, cheap and fast.
All they need to do is go back to their old recipes and ingredients from 1960s and 1970s even the first half of 1980s, and they would be back. There is no mystery to their downfall — their food simply became inedible junk. Their famous fries have gone down the worst with their crappy fake tallow and cardboard-like pesticides laden GMO potatoes.
Nothing fried in oil is edible anymore. No fries, mcnugggets or hash browns. They all taste like baking soda now.
“Save the fish burger!”
The ONLY thing I like there : )
I agree. The beginning of the end was when they PC’d the fries.
But their fate was sealed when they decided to kiss the rings of the 0bama Marxists.
That was my favorite sandwich, but lately they’re nothing like they used to be.
Also: another vote for bringing back the tallow to cook the French Fries.
-JT
For me it boils down to the quality.
I go to Culver’s, Chic a fila, or Hardees before McDonalds.
I only go there if they are the only thing on my way. I rarely set out and say “I want McD’s!” The only exception is the breakfast menu.
The burgers suck, the fries are bad, the the chicken tastes like rubber. The price is great, but for a few bucks more I can get better food.
2miles away from my old neighborhood the mickey d’s was on a major traffic route. when it was renovated it was all african american art on the walls & decor to match. it was a slap in the face to all the other races of people who patronized it.
Yep. it all bites, and WE won’t take a bite : )
The left should be proud; they are getting rid of all those nasty minimum wage jobs! By doing this, the average wage in the US goes up. Of course, so does unemployment, but only until they stop filing.
Chicken nuggets were great for kids. Maybe something similar...breaded/battered beef or pork medallion would have worked.
I’m doing that for my picky grand kids. Take a quarter pound burger, cut it up into 4 or 5 pie shaped pieces then pre cook, bread and final cook.
Works.
I’m working on getting them to like Horsey dipping sauce...
McDonald’s will just shift everything to Japan like 7-11 did.
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