Protesters aren't happy with McDonald's, but neither are its franchisees
McDonald's restaurant owners are less optimistic than they were a year ago, thanks to still-declining sales and a perception that the burger giant has run out of ideas.
Steve Easterbrook has replaced Don Thompson as CEO but McDonald’s franchisees’ dissatisfaction with management has not been replaced with optimism. Janney Montgomery’s Scott analyst Mark Kalinowski’s latest survey of McDonald’s owners—32, representing 215 stores—finds them even less optimistic than they were a year or even a one month ago. One says the brand “has jumped the shark,” meaning it has run out of ideas.
When owners were asked to rate their six-month outlook for their business on a scale of 1 to a high of 5, March’s 1.48 average was the lowest in the 11 years that Kalinowski has conducted the survey. Three months ago, the average was 1.67.
One reason for the gloom may be still-declining sales. The aggregate prediction from these 32 operators was that McDonald’s March sales were down 3.7% (and -4.6% in the East). Said one operator, “McDonald’s system is broken. They talk menu reduction to help our people, simplify our menu for customers, but add products t help sales and it doe not work. We will continue to fall and fail.”
Another operator’s assessment of what’s wrong: “Customer concerns, McDonald’s leadership, customers want different tastes.”
McDonald’s held a “Turnaround Summit” with operators earlier this year. Most were not impressed with the ideas presented—especially the Create Your Taste customization platform being tested—or with management’s ability to engineer a turnaround. Said one, “The Turnaround Summit was a farce. The ideas presented—such as Create Your Taste—DO NOT fit our business model. McDonald’s Corp. has panicked and jumped the shark. The problem is an unwieldy menu—too big—and trying to be all things to all people.”
“Create Your Taste will cost approximately $125,000 per restaurant,” said another owner. “It sounds like, initially, sales with this new concept are very slow taking off.” One owner complained, “I came away from the summit confused. McDonald’s management does not know what want to be. Expensive—and slow—custom burgers in the same restaurant where we sell the Dollar Menu?”
One operator said simply, “Pie in the sky,” which may be the latest item on McDonald’s menu.