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.
Except for one franchise in Maine.
Two BK tacos for 99 cents - I haven't been back to McDonald's since discovering them.
McDonald's spent years trying to become the place for kids. To the point that parents hate to even hear the word. The ONLY time I would consider eating at McDonalds anymore is when I had some kids with me (and even then I would try and talk them into someplace else.) What adult wants to eat in a restaurant full of screaming kids?
Other fast food restaurants have figured this out, but McDonald's is in too deep. It took decades to create this image of a kid's restaurant, and it will take decades to undo it. Unfortunatly for their stockholders, they don't have that much time.
I am always amazed anew at how such a clean establishment could have such poor, slow, stupid service. They are getting their clock cleaned by the snappy and accurate service at the Taco Bell right across the street.
I used to feel that way, but McDonalds won me back with their delicious double cheeseburgers for like $0.99. Mmmm mmmm good.
I use drive thru as well :-)
A lot of college kids look forward to the Monday and Wednesday cheeseburger specials. A lot of calories for not much bread.
Unfortunately for the burger masters, beef makes my skin break out (I'm in my 50s). Have to suffer through life with chicken, pork, fish and lamb.
I haven't eaten in one of their burger joints in years for my own reason(s); however, in all fairness to McD's?
The problems Kalinowski describes afflicting McDonald's are a cancer upon this entire nation, effecting businesses of all kinds.
Anyone owning/operating or managing a business knows we're in some deep kimchee on the subject of, "Present quality of employee(s)."
McDonalds must hire the people each community produces -- like all bussinesses must -- & then, TRY to work with what they've got.
Lousy parents (if there're any parents a'tall) &/or parenting, a pop generation influence on what is & isn't "cool" (visa-vi television) combines with a public school system which has succeeded in placing a "I'm right & you're wrong" attitude deep into the little monter's heads so they "feel good" about themselves have produced millions upon millions of stupid, lazy dolts.
The truth of this horrible condition we're in is manifesting in this guy's gripes; &, by God McDonald's can do little about that.
NOT for the $5.00 p/hr wage those jobs merit, anyway.
It's really no more than a simple case of "crap in, crap out."
...& now all the cultural sloppiness comes home to roost.
1) Go back to the beef tallow for cooking the fries, dumped many years ago to make them "healthier." In those days, they were the hands-down best-tasting fries in the business. I didn't have many triathletes eating at mine...
2) Go back to frying the meat patties on a grill then sticking them in a bun while they're still sputtering. Dump the microwaves (or in McSpeech, "Q-ing Ovens" because Q stands for quality, dontcha know).
The kid point made earlier was valid too...
They forgot "service in english" which seems to become more and more difficult each time we go there...
Two best McDonald's I have ever seen:
Subic Bay: waiters...food is brought to you, not in containers, but on plates.
Hong Kong: Food looked like it was straight out of a commercial on TV. And, it was four stories tall! (OK, OK, only 15 feet wide...but four floors)...
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.
I'm sure she was quaking. I used to work retail, and you are the type of customer that always made us laugh. Nothing personal, I'm just stating the truth.
I don't know. Is there a work ethic with kids these days?
Approx. $6/hr. You try it, and let's see the attitude. You get what you pay for.
What more do ya' want?
No thanks.
Leaving aside the issue that I always felt silly ordering it by that goofy name, when I was a kid (a few decades ago) the McDonald's fish sandwich was delicious. It was juicy, tasty, and wonderful. It tasted like, surprise surprise, fish.
Now, it's dry (it'd stick in your throat if it weren't lubricated by tartar sauce) and tastes like cardboard. The "meat" is also about half as thick as it used to be.
Economics is not dictated by what the employee is "supposed" to use their wages for. Economics is dictated by a balance between wages and labor. If their is imbalance in this system, there will be an imbalance in the quqlity of service. All talk of "work ethics" aside, there must be fair wage for fair labor. Crappy wage=crappy labor, all bellyaching aside. There is no such thing as a work ethic simply for work ethics' sake.
If you want better service, be prepared to pay $6 for your Big Mac. If you are not willing to pay that, than you can forget about service with a smile, and tucked in shirts.
Who cares about that anyway? I'll take the cheap food and not worry about the quality of employees that their pay scale attracts.
but gained it from every other parent. Geez, we used to plan our weekend outings around locating a McDs. Get out of the house early, get the kids pooped out somewhere from hiking, playing, etc, hit McDs and let them nap on the way home.
I agree with one of the other posters, however - even our kids are starting to get sick of Micky Ds.
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