Posted on 09/17/2002 12:52:15 PM PDT by GeneD
NEW YORK - Making arches more golden is easy; making your workers more professional is hard.
That is the problem facing McDonald's, which has 30,000 restaurants and more than 360,000 employees around the world. Today, the Oak Brook, Ill.-based fast-food giant warned once again that it would see lower-than-expected profit. The world's biggest restaurant chain said it expects earnings of 38 cents to 39 cents per share in the third quarter, well below Wall Street's prediction of 42 cents per share, according to market research firm Thomson First Call.
The news sent McDonald's shares down more than 10% in midday trading.
In a press release today, McDonald's Chief Executive Jack Greenberg called the U.S. marketplace "extremely competitive." Indeed, the chain faces challenges from the higher-priced hamburgers of Wendy's and the cheaper fare of Burger King, not to mention the entrance of higher-quality brands offering "fast casual."
Greenberg outlined several initiatives to counter the challenging environment, all of them focused on the faltering U.S. market, which is responsible for 56% of the firm's total profit. He said McDonald's would pump between $300 million and $400 million into existing U.S. franchises next year, presumably to renovate certain restaurants and introduce new equipment.
The plan will be paid for in part by reducing new restaurant openings. McDonald's, which has reached saturation levels in several important markets, had planned to open up 1,400 new restaurants, according to a Morgan Stanley report. The report said that cutting new openings to 1,000 would do little to change total sales. What apparently gave investors more concern was that the company also said it would cut share buybacks to about $500 million from the $1 billion it spent last year. With stagnating sales, share repurchases have been one of the only things increasing the firm's earnings-per-share ratio in the past few years.
Greenberg said McDonald's will benefit from increased advertising of its $1 value menu. The move is a positive one, according to Morgan Stanley analyst Michael Sherrick. After all, the company needs to compete with Wendy's super value menu and Burger King's recently introduced 99-cent menu. In addition, cheaper items draw customers and result in order add-ons.
Though the franchise is right to upgrade skeletally by sprucing up existing restaurants and reducing prices, it is having a much harder time improving the blood and guts of the operation: its massive and far-flung staff. As Salomon Smith Barney analyst Mark Kalinowski said in a report last week, "We would love to see more details about how McDonald's will combat what we view as its key challenges in the U.S.: rude service, slow service, unprofessional employees and inaccurate service. In our opinion, what we have seen does not go far enough in addressing these issues, which together account for the vast majority of customer complaints in the U.S."
Until McDonald's comes up with a plan for upgrading service, warnings may be a quarterly event.
I hate McDonalds because I ordered a Big Mac and fries in the drive thru and they made me park and wait. What the He// I ordered the most popular item on the menu and I have to park and wait. Then I asked for catsup and they guard it like it is Fort Knox gold.
Paying your employees a wage actually worth working for might help.
You get what you pay for. Economics 101.
I think part of the problem is that McDonalds has a history of promoting from within. Normally, this can be a prudent business practice but the whole dynamic breaks down when the pool of individuals you have to select from are nearly worthless. The least lazy usually winds up running the show. Hey... perhaps we should not rush to be too critical. Mc Donald's is probably keeping tons of people, suited to no other line of work, off welfare.
They could lose the clown too... scares the heck out of my kids.
As for myself, I'm afraid I'm not a big fan of their miserable kiddy-food.
I'm child-free, and will not choose to spend my lunch break around kids.
So they made their bed, chose their market, let them live with it.
You and I must have been in the SAME Burger King! Several years ago I was in the Burger King at Elmendorf AFB, Alaska, early on a Sunsday morning (waitining for the BX to open, I think). The two teenagers out front were engrossed in their converstaion about what they had done Saturday night, and when I EVENTUALLY got my food, it was burned ! Unbelievable (and the place was dirty, too).
I have never set foot in a Burger King since that day, and I never will.
And it's not snobbery- I earned my spending money in High School working at Friendly Ice Cream, including doing the janitorial work after closing each night. It was good experience for married life!
A McChicken Sandwich and a small Yogurt Parfait cost $1.00 each. That's cheaper than cooking it at home.
The workers...those poor kids. They're training to be wage slaves for the rest of their lives. If they had brains, they'd go somewhere where they were treated better and got tips.
She had such a dark face it looked like I was inflicting punishment by showing up to order food. Though I had been shorted french fries on two previous orders, I decided not to bring the issue up that evening. Nevertheless, I was treated like dirt, and this kid looked like a slob. Shirt untucked, etc.
After I received my food, I said, "You're supposed to make me smile, right?" She feigned a nervous smile and said, "Yeah."
I said, "Well it didn't work. You're shirt's untucked. You're acting like a b*tch. And your manager is going to hear about it."
I took my food and walked out, and as I walked out I heard her say to someone nearby, "Did you hear what he said to me?" If I had the cahunas I would have walked back and said, "I was talking to YOU."
I don't know. Is there a work ethic with kids these days? McDonald's to me has always been a bright spot in the way of good, clean food and fun. Hard work. Just a great company all around. But I've gotta say, it will be a heckuva task for them to come up with personnel who do their name and reputation right.
Catch this friend--10 yrs. ago when I lived in the far West suburbs of Chicago--where I assume most of the money in Illinois is located--McDonalds was offering $8/hr. They couldn't get any spoiled brats or wealthy seniors to fill their positions.
However, the level of inefficiency in the so-called fast food industry gives a whole new meaning to the term "fast food!" Were I pressed for time, I wouldn't consider going to any of them.
That is the problem with all large corporate chains. They treat the employees like dirt and pay them next to nothing, so nobody decent is willing to work there. That leaves the customer wondering why the service is so crummy.
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