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.
You are correct. It was the beef tallow that they removed, because of a lawsuit.
It’s because the prices are too high for a fast food plus competing with many more fast food, such as panera, chipolte,salad works, etc. They serve “healthier” food for not much more.
I was at McD’s the other day. My daughter and I for lunch cost $12 and some cents. It’s not cheap anymore. We had sandwiches, shared fries and soda.
McD’s have also catered to one segment of society and apparently they don’t eat there often enough.
Salads don’t sell because it’s a fast food burger place who stopped catering to that clientele.
My kids love chick fil a but I hate the food. Give me a big mac lol.
Thing is...Panera, Saladworks, Chipolte, Pancheros, etc. all have comparable food/prices. Those are the places people are buying from so McDs is suffering.
Just like everything else in America.
It caters to certain segments, just like many are doing now.
I guess they forgot the other areas of the country.
This is true.
They made these places adhere to standards that caused prices to rise and shut out the people who frequent these places.
Now, if only they had burgers.
What have you got against your stomach?
They’ve catered to the “african american” clientele for sure but it’s not the only reason they are struggling.
In my area, it’s not the AA who serve, it’s non english speaking illegals. It will be interesting to see if the business survives. They have the customers for sure...but losing the white customers to other places.
And they ain’t cheap anymore.
Paninis. That’s the ticket ;)
I had one the other day, first in decades. It wasn't bad, but my mind wasn't exactly saying "burger" when I ate it....some kind'a sandwich.
Oh it ain’t a burger per se. I love the big mac sauce lol. Something about it.
I like it for some reason.
That is exactly what we always say. A McDonald’s cheeseburger is really kinda it’s own food. I use the term food loosely. But, sometimes I gotta just have one.
Make your own.
Mix together some catsup and mustard. That's all it is.
Yeah, Burger King sucks now too.
Wendy’s is pretty good.
Same with Taco Bell tacos. Not many stores around here. I can eat 5 or 6 of them...with "fire sauce".
All of 'em - not just the few liberal elites who mistakenly walk in thinking McDonald's is carrot juice bar... and yell out 'more kale' as they're running out the door...
McDonald's upper management cares about being politically correct - they want to fit in with 'liberal elites'... That's their values. Crappy food, uncomfortable atmosphere, and hostility toward people like me... If McDonald's can survive while giving the finger to half the population (conservative Americans') more power to 'em.
If they can't, they go under.
It’s Thousand Island dressing, only some cornstarch so it’s thicker and stays on the burger better.
Of course if you’re going to be making a sandwich at home with dressing make a Reuben.
Correct.
Liberals set McDonald’s up the Bomb Nanny State PING!
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