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.
I’m not loving it.
That stupid tag line should have been gone a long time ago.
Mcdonalds caved under pressure from CSPI, which is a pseduo-science vegetarian extremist group. This is why they changed from beef tallow fries to veg oil. Its why the really good deals on burgers went away and they started pushing salads nobody wants.
You contradict yourself: “smarter about their health” == NOT eating @ fast food joints!!
‘Bout the only fries I enjoy anymore are Rally’s (seasoned). Everything else is limp, unsalted and tasteless.
"I use a trick with co-workers when we’re trying to decide where to eat for lunch and no one has any ideas. I recommend McDonald’s."
"An interesting thing happens. Everyone unanimously agrees that we can’t possibly go to McDonald’s, and better lunch suggestions emerge. Magic!"
"It’s as if we’ve broken the ice with the worst possible idea, and now that the discussion has started, people suddenly get very creative. I call it the McDonald’s Theory: people are inspired to come up with good ideas to ward off bad ones."
I knew they were seeking a different customer base when they started playing rap music on their radio commercials - on country music radio.
Of course, now half of country music sounds like rap and hip-hop, so who knows - maybe McDonald’s started the trend.
You nailed it. McDonald’s used to be fun. I got the food I wanted without food nanny disapproval. Stopped buying Happy Meals when they short-changed on fries and removed the cookies. Bought a few salads, none fresh, so stopped. Then they had one person take the order and made me wait in line across the room for another person to call my number. With no accountability, waiting time increased. Any personal connection vanished.
Too many choices, too, adding to the time wasted. McDonald’s as a Starbucks wannabe is ridiculous. I haven’t considered going there in several years.
I’m not a fan of their food, though when backed into a corner by circumstance I will eat an Egg McMuffin. On the other hand, if I’m stuck drinking fast food coffee, I’ll go to Mickey D’s. The McCafe coffee is a cut above that of every other burger joint.
I had not eaten there since 1997. Three weeks ago my band insisted on eating there. I had a fish sandwich. It looked like it had been 3d printed. Taste wise, it wasn’t bad, but it wasn’t good either.
I don’t do fast food. When you are almost 62 with no health insurance, you take care of yourself.
I must disagree. Certainly it was not a good business move to turn their fries into something nobody wants to put in their mouth.
During all that time, we just wanted a breakfast sandwich to go - plus a child's burger with nothing but meat for our 5 lb. Yorkie, who eats just the meat.
Anyway, at one point on the way back, a McDonalds employee told us the Burger King was serving breakfast all day, so we left there and went to Burger King and that is where we went from that time on. I got the Croissan’wich which was good but their muffin/sausage was really super - they call it a “muffin” but it is the best biscuit I ever ate. This is the Burger King all day breakfast now:
“Featured on the menu will be brand new Croissan’wiches - which is a croissant bun filled with American cheese, an egg patty and filling of your choice - as well as Bacon and Sausage King Muffins.”
Remember when McDonald's hired local high school kids and one out of five families had a teen who had worked there at one point? Always a friendly face. Now they've gone with 'professional washed up gang bangers' and it's not a nice experience. Nothing about McDonalds is good anymore - not the food, not the service, not the atmosphere, not the old community involvement. It's run by white liberal elites and it's unpleasant.
One of my sons works there and has given his 2 week notice. Their revolving door employee policy is a big indicator something is wrong. On the other hand Taco Bells employees stay for years and are much happier. My other son who works for Chic-Fil-A loves his job there.
Keep in mind that the salads serve two purposes:
Counter the attacks from the Left, but also act as a loss leader to get health conscious Moms (and metrosexual Dads) to bring the kiddos in for the higher-margin/higher volume food.
Bojangle’s does a good seasoned fries... of course they’re not everywhere.
Isn’t that what Burger King did also? I know WB went all out with their characters dressed like mongrel rappers.
I just can’t stand that tagline, reminds me of every stupid woman I ever worked with. “Loving it!” Oh STFU.
The 24 hr breakfast is pretty dumb. They can barely make a fresh one during breakfast time when people are ordering them. How stale are they going to be if you order one at 5pm? They won’t be selling many at all for dinner hours I’ll bet.
Social liberals destroy every single thing they touch and they never take any blame for anything and all they ever do is go around blaming everyone else for everything.
It’s high time for an all out war on liberalism before we lose all of our freedoms.
Not surprised. The Sodium Police would be angry.
“Most obvious business case failure!
BRING BACK THE GREAT FRIES!!”
You don’t need Wharton, or Harvard Biz School to figure this one out : )
I wonder how much of McDonald’s pain is coming from folks who started going to, or increased going to, Chick-fil-A a few years back?
Anecdotal, I know, but we go to CFA a lot more now, as do a lot of people we know. We go to BK and Wendys about the same. The loser has been McD’s.
Year round shamrock shakes, problem solved.
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