McDonald’s franchisees hit out as relations reach new lows, according to survey

News.com.au
APRIL 16, 2015
FURIOUS McDonald’s franchisees in the US have hit out at the company, accusing it of having “jumped the shark” as relations fall to their lowest level in more than a decade.
That’s the finding of the US-based investment firm Janney Capital Markets in its latest half-yearly McDonald’s Franchisee Survey, which paints a grim picture for the future of the company.
Store owners rated both the business outlook and their relationship with head office poorly. The six-month outlook was the worst since the survey began in 2003.
Complaints from the 32 franchisees, representing around 215 stores, centred around a bloated menu, lack of direction and weak marketing.
“McDonald’s system is broken,” one was quoted as saying. “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.”
Asked what hurdles they saw in the future, franchisees were blunt. “There will certainly be hurdles. Two largest are 2015 and 2016 survival,” said one.
They also slammed a recent ‘Turnaround Summit’ hosted by new CEO Steve Easterbrook, who was brought in to reinvigorate the company’s flagging sales after former boss Don Thompson stood down.
“I came away from the Summit completely confused,” was one comment. “McDonad’s management does not know what we want to be. Expensive (and slow) custom burgers in the same restaurant where we sell the Dollar Menu?”
Another described the Summit as a “farce”. “The ideas presented — such as Create Your Taste — DO NOT fit our business model. McDonald’s Corporation has panicked and jumped the shark. The problem is an unwieldy menu (too big) and trying to be all things to all people.”
Others described it as a “waste of time” and “much ado about nothing”. “Why go out to a cheerleading camp when you don’t have a direction in mind and the team is in shambles?”
Commenting on the general direction of the company, one international respondent was blunt: “When a hot-air balloon is going down, throwing weight off will only reduce the speed but the flight direction is obvious.”
McDonald’s has more than 35,000 stores globally, of which more than 80 per cent are run by franchisees. Mark Kalinowski, lead restaurant analyst with Janney and author of the survey, noted the importance of good relations.
“In general, we argue that corporations who have franchisees on board and enthusiastic about senior management’s plans or strategy tend to fare better than those that don’t enjoy this type of a situation,” he wrote.
frank.chung@news.com.au