Survey: Franchisees Unhappy Over McDonald’s Costly Business Decisions

Recent reports of McDonald’s dwindling overall sales performance has created a stir not only among executives and investors; franchisees are expressing dismay over the issues plaguing the world’s largest hamburger fast-food chain.

A recent survey by Janney Capital Markets revealed how franchisees, which have reached some 14,000 stores scattered across the United States, are becoming increasingly unhappy with the company’s “aggressive promotions and costly restaurant upgrades”. Thirty-two domestic franchisees maintaining a total of 256 restaurants were interviewed

McDonald’s has admitted to having problems that include the recent 3.7% same-store sales drop in August this year, which marked the company’s record loss for the decade. By September, the figures were pegged at a gloomy 3.6% decline. For the last two quarters reported, the fast-food chain with its iconic Golden Arches reported negative earnings.

The global loss has ultimately led to 719 chains closing down – beyond the originally planned 517 store shutdowns – mostly in the United States and Japan.

CEO Don Thompson had said in July that “over the next 18 months,” the company would be undergoing a fundamental restructuring of its business to address the issues. He said management will focus on “compelling value, marketing and operations excellence to become a more relevant and trusted brand.”

Analysts are attributing McDonald’s “more formidable than expected” business challenges, as Thompson puts it, to customers’ evident shift in terms of food preference. The love for traditional burger-and-fries meal may have waned as customers see an increasing number of “fresher”, “organic” and “healthier” offered by competing fast-food chains, led by Chipotle and Chick-fil-

In an effort to win back customers, McDonald’s aggressive promotions, restaurant upgrades and menu adjustments to cater to the changing tastes of customers. Such attempts have been expected to result to revived sales, but franchisees are the first to cry foul. Recently surveyed franchise owners complain about the menu being “overcomplicated”. Others point to the business changes coming in too fast that they squeezed profits out of them.

The future of McDonald’s seems bleak, if the franchisees were to be asked. Business Insider Australia has compiled the franchisees’ statements lamenting their situation:

“Growth for McDonald’s is over,” one franchisee wrote in response to the survey by financial services firm Janney Capital Markets.

“I am just hoping to be flat,” another franchisee said. “[The] customer has lost faith in the brand.”

“We are leaderless,” said a third. A fourth franchisee complained, “They are being successful in bankrupting us.”

“Everything depends on Monopoly,” one franchisee said. “I am counting on Monopoly to stop the bleeding,” said another.

“Nothing positive to say about McDonald’s or its future,” one respondent said.

“We just have nothing new to offer our customers,” said another.

A third lamented, “Even remodels and rebuilds don’t build sales anymore,” while a fourth said, “Just hoping we’ve hit bottom.”

“All talk, no action,” one franchisee wrote. “They continue to add more items (and admittedly will add more) even though they talk about reducing the menu. Top management is clueless as to what goes on in the stores.”

A second franchisee wrote, “They simplify… and then just add more products. I don’t think that anyone at McDonald’s really has a strong vision for the brand.”

“We must stop the madness of tearing apart or tearing down perfectly good buildings,” one respondent wrote. “The owner/operators can’t handle the debt since there is little sales increase.”

Another wrote, “There are many McDonald’s franchisees who took on a lot of debt to improve McDonald’s real estate and now they are waiting for McDonald’s corporate to come to the rescue. They will probably wait too long and end up on the street.”

Photo by Just Joe ( I’m back…sort of )

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