Are McDonald's USA Same Store Sales Doomed?

An analyst buddy sent me the above picture asking for my feedback on this new product test. For the 500th time I had to explain that I don't track or pay much attention to new product tests at McDonald's and that new products often do more harm than good.

This is obviously a picture of a tray liner from one of the test stores. What caught my attention was the term, "made to order right in our kitchen".

Here we are again. Made to order means slow service, pure and simple. And McDonald's can't build sales selling slow food.

There's a reason the average Five Guys barely does $1 million a year, they are dog slow, almost deliberately. There's a reason the average Chick-fil-A does almost $4.5 million, their service is blazingly fast.

No amount of discounting or food giveaways will keep McDonald's USA sales from declining to Burger King levels if HOTG or "made to order" becomes the operating standard.
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Jefferies Excited About McDonald's App

Analyst Andy Barish can be reached at:  abarish@jefferies.com

Buy McDonald's shares because its mobile deal app usage is surging
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Featured Comment of the Day

Anonymous said...

Let do a quick review, Chris K., like all good snake oil salesmen sold us a plan that “WE” all knew in our hearts wouldn’t work. Regional Leadership pressured us to signing under duress on the bottom line the “Letter” that would become our undoing. Gladly many of these Corporate stooges have learned how important they were to the system when they were shown the door. Now we are in the “Save Chris” times, as with the movie Ferris Buller from the same city we are being lied to everyday. Our car has been stolen and the garage attendants that run this company they are running up the miles on our business each day destroying the value of a business that we depend upon. The “Millennial Force” that attend daycare at MHQ each day have no knowledge of our history, our founder or our business and would never tell their peers what company pays their salaries. These blue hair geniuses walk around the West Loop believing in “Change” because Chris & Steve tell them they are part of a movement to change the world. Ever heard of a cult? They think how they are told to think.

Leadership collectively believe that owners are idiots, and honestly why would they not? Sadly things are going to have to get worse before they get better. Individually folks are scared to speak their minds in fear of reprisals from?? They aren’t even sure who does what but I digress. Until operators decide that this is our business and leadership are just temporary in position for the stock market we will continue to be bullied. Ray said “None of Us is a Good as All of Us”. We owe it to Ourselves and Ray to fight the good fight to preserve the brand that we all owe our livelihoods to each day. I am starting to see waves of courage from individual markets voting down the latest wave of OPNAD entitlement. Travis has sold us out to corporate and Chris continues to push the edges of control. Like any good dictator he has eliminated any dissenters from his ranks and is pushing for total control by trying to empower the OPNAD body to have total control. Don’t be fooled by the “More Nimble” propaganda, its all about total control to “Save Chris”. Make sure you stay strong and tell OPNAD NO!

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There more great Operator comments on posts "Tried the BBQ glazed tenders" and "Waiting on my tenders"

Make a Call to the Whitehouse

Putting Pearce back on labor board would be a blow to small business - TheHill
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Are Robots the Answer?

Fad Or The Future? Robot-Made Burgers Wow The Crowds In San Francisco
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Why Some Restaurants Are Losing Customers

Jonathan Maze is one of the best journalists covering restaurants and Howard 
Penny is one of the most independent minded analysts covering restaurants.

In this pod cast the two discuss the QSR industry and McDonald's.

That's the first 25 minutes. The remainder is Jonathan and one of his associates
discussing start-up chains.

From Restaurant Business Magazine
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Waiting On My Tenders

In last night's post, I neglected to mention that I got pulled to wait for my tenders order. 
The crew person said they were cooking my tenders. Now, my order included a QPC so 
that could have been part of the hold-up.

Nevertheless, from the time I parked in the designated stall to the time I received my 
food was a full SIX minutes. As a customer, I might try the tenders again. If I have to wait
a second time I'll likely not order tenders again. I'll order something I know is quick (McChicken) or I'll go to the Taco Bell/Arby's/Sonic across the street.

Remember, the dumbest words ever uttered by a McDonald's corporate employee were 

said during the introduction of Made For You:

"Customers don't mind waiting a little longer if they know it's made just for them."
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Tried the BBQ Glazed Tenders

Pretty good product. I went to the drive-thru and the tenders smelled so good in my car I 
had to pull over and try them. When I opened the box I thought to myself, "this has got to 
be the messiest product McDonald's has ever sold".

I finished one tender without staining my upholstery but took the rest back to the office so 
I could wash up in the sink after eating the remainder.

I spent a while wondering, "What were they thinking, developing such a messy product".
With McDonald's being such a drive-thru business, messy products do not sell in large 
numbers. How many orders of Hotcakes and Sausage are sold in the Drive-Thru?

Then it dawned on me - BBQ glazed tenders are for McDelivery! Management is planning 
on loading up the menu with new products that will only be applicable to McDelivery.

That'll simplify things!

A Lobbying Opportunity

Susan Kezios, President of the American Franchisee Association has asked us to make franchisees aware of some interesting legislative activity that may impact franchisees.

A Federal program called EB-5 was initially created by Congress on 1990 but is up for 
renewal in September. The EB-5 program allows well capitalized immigrants to invest in
the United States and eventually receive permanent resident status.

Small business and franchises have had access to this capital but with this renewal large 
real estate developers are leaning on Congressional representatives to delete the small 
business and franchise language.

The AFA is asking franchises in Iowa, Kentucky, and Texas to flood their Senators' offices 
with phone calls and E-mails supporting the continued inclusion of "small business and franchise" language in the renewal of EB-5.

If anyone is interested in more information I have a package I can send you by E-mail.

Meanwhile, McDonald's Operators in the above three states might consider contacting 
their Senators.
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Apparently the Person Running the McDonald's Twitter Account Has No Idea How Things Work at McDonald's

MB@Milliemaebaker

 · May 30, 2018

I wish McDonald’s did sweet potato fries

McDonald's

✔@McDonalds

Hey there, Millie! Thanks for reaching out! Menu items vary by restaurant and/or franchisee. Let your favorite store know you want Sweet Potato Fries on the menu!

10:52 AM - May 31, 2018

• 2
• See McDonald's's other Tweets

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The Erasure of McDonald's History is Almost Complete

        Des Plaines replica McDonald's meets wrecking ball

Check Out Our Featured Post >>>>>>>>>>>>>>>>>>>>>>>

Frequently a post  will get down the page while Operators are still making comments on the
topic. If we get a string of comments I'll feature the post so the comments don't get missed 
by regular visitors. The Featured Post always shows up in the upper right hand corner.
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Downey CA - Oldest Operating McDonald's

Celebrates 65 years
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The Deal is Done

Tyson Foods to Buy Keystone for $2.16B Cash - ArkansasBusiness.com
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Where Are Plastic Straws Being Banned?

The plastic straw debate bubbles up to the surface - NRA

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More Insight Into July Sales

Nation's Restaurant News takes a deeper dive into restaurant sales using Commerce Department data. They ask, are independents doing better than chain restaurants? 

Restaurant spending jumped 1.3 percent in July, says Census data
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Coming To A McUSA Near You?

McMadness Across China: New McDonald's Deal Takes Country By Storm
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Jonathan Maze on the Labor Market

   Is the tight labor market hurting restaurant sales?

The McSpin Machine Rehashes Two Year Old News

What are we missing here? This is old news repackaged with a lot of work done bringing
in local politicians and McDonald's Operators for pithy quotes. 

Apparently, management is frustrated that the share price has languished in 2018 and is
trying to revive the "modern and progressive" angle.

It appears there were individual press packages for nearly all 50 states.

It worked to some degree as MCD shares were up $2.46 today. We'll see what happens
on Wednesday.

McDonald's to spend $6 billion on nationwide restaurant makeovers
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Calling All Truck Drivers

Pressures Of America's Truck Driver Shortage Extend To Restaurant Industry

JIB "Reinventing" Drive-Thru

How Jack in the Box Plans to Reinvent the Drive Thru - QSR magazine

The QSR 50 - QSR magazine

This info-graphic is fun to click around to sort the chains by category.

The QSR 50 - QSR magazine
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The Restaurant Industry Took a Vacation in July. Again

Why were restaurant sales soft in July? - Jonathan Maze
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Black Box on Restaurant Sales for July 2018

Same-store-sales weak in July
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Just What World Needs - A More Labor Intensive McDonald's

McDonald's Kiosks Mean More Staff at Chicago Flagship, Not Fewer

Too Many Restaurants

"At what point do lenders stop lending money to weak restaurant chains?"

Where are all the restaurant customers? - Restaurant Business
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Deep McThoughts

Paging through "Behind the Arches" it occurred to me that - if we use 1955 as the starting 
date for the McDonald's system - the company is 63 years old. The book was published (plus/minus a couple of years) half way through the company's life. 

The book describes the founding and the first 30 years of entrepreneurial growth.

The second half of McDonald's history has been all about enriching McDonald's shareholders and impressing Wall Street analysts.

That book has yet to be written.

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McDonald's Operator Association (MOA)

Occasionally a visitor to this website mentions or asks about the history of the first 
McDonald's Operator Association (MOA). Several people have asked me for some feedback 
on the topic.

Frankly, MOA was before my time in that I was a shave-tail McOpCo guy in those days in a predominantly McOpCo market.

I didn't know much about the franchised side of the business until I moved into field service. 
By then MOA had dissolved and the NOAB had been formed.

I do remember the regional managers being very nervous about MOA. But, two of my first instructions as a field consultant were, a) Don't talk to the Operators about MOA. b) Don't treat the Operators who were in MOA any differently.

But, I can make a reading recommendation. Even though it was originally published more 
than 30 years ago "Behind the Arches" by John Love is still the definitive work on the history of McDonald's.

Love begins with six words, "This is not a corporate book".

I can bear witness to that statement. He did most of his research on the book when I was 
still a corporate franchise guy. I worked out of the San Diego regional office and John spent 
a lot of time in that office attempting to get some of Ray Kroc's time. While he was waiting 
he had complete access to corporate employees with no supervision from Oak Brook.

I'd find him chatting casually with corporate employees at all levels. He was often in the
break room having coffee with a couple of corporate staffers. This is not a corporate book.

While he doesn't devote an entire chapter to MOA he covers that part of McDonald's history pretty well.

Anyone who has made McDonald's their career or a path to business ownership should read "McDonald's, Behind the Arches".

Crain's Cahill on McDonald's Barbell Strategy

"Yet an all-out price war risks blowback from McDonald's franchisees, who now control 
more than 90 percent of the chain. Deep discounts squeeze their profit margins, and 
they won't hesitate to complain if McDonald's goes too far. Franchisee pressure forced McDonald's to abandon the original Dollar Menu."

McDonald's Easterbrook needs a clearer marketing strategy
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Franchisees Sue Tim Hortons

U.S. franchisees sue Tim Hortons
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