McDonald’s Franchisees Say Company Has “Jumped The Shark”

(Ken Fager)

For years, a number of McDonald’s franchisees have been griping with their corporate overlords about constant menu tweaks, limited-time offerings, and a push for bargain pricing. And the latest survey of franchisees seems to indicate that this tense relationship is only getting worse.

For more than a decade, analysts at Janney have queried McDonald’s franchisees and the results of the most recent survey “rate the relations between franchisees and corporate as the lowest they’ve been,” according to Janney’s Mark Kalinowski.

And the 32 franchisees, representing 215 stores — who took part in the survey didn’t hold back about their feelings.

“McDonald’s system is broken,” said one franchise owner. “They talk menu reduction to help our people, simplify our menu for customers, but add products to help sales and it does not work. We will continue to fall and fail.”

McDonald’s recently brought in a new CEO, Steve Easterbrook, and held a “Turnaround Summit” to discuss ways to improve the business.

“The Turnaround Summit was a farce,” writes one franchisee. “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 is the build-your-own burger program that McDonald’s recently expanded to around 2,000 restaurants. Some franchisees are not lovin’ it.

“Create Your Taste will cost approximately $125,000 per restaurant,” said one. “It sounds like, initially, sales with this new concept are very slow taking off.”

Another franchisee says he was left “confused” by the summit: “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?”

For the survey, franchisees are asked to rate their six-month business outlook on a scale of 1 to 5. The record high for McDonald’s is 3.46, back in Feb. 2004, and the company’s historical average is 2.8. The latest survey came in at 1.81, placing the outlook between “poor” and “fair.”

McDonald’s Owners Doubt ‘Create Your Taste’ [BurgerBusiness.com]

McDonald’s Relationship With Franchisees Seen Reaching New Low [Bloomberg]

by Chris Morran via Consumerist