Franchisees not lovin’ McDonald’s outlook
‘There is no leadership, no plan, no respect for operators’
McDonald’s is breaking the kind of records it probably doesn’t want to break.
Even as its domestic sales have headed south, the six-month business outlook of its franchisees has fallen to a historic low — the worst in the 11-year history of a quarterly survey of store owneroperators by Janney Capital Markets. Store operators say their strained relationship with McDonald’s corporate executives are the worst in the survey’s history.
Even more concerning: The anonymous survey of 32 operators who own 215 restaurants took place in early April — more than one month after Steve Easterbrook stepped in as CEO. So the concerns are with the new leadership — not with the old. The survey results come days before McDonald’s is scheduled to release its first-quarter 2015 earnings and March sales report April 22. Analysts do not expect positive results.
“The system is broken,” one franchisee said in the survey comments collected by analyst Mark Kalinowski. “There is no leadership, no plan, no respect for operators.”
Another said, “Relations between McDonald’s corporations and operators are the worst I have even seen.”
McDonald’s questions the survey results and notes they are based on a tiny sample. “Approximately 3,100 franchisees own and operate McDonald’s restaurants across the U.S. Less than 1% of them were surveyed for this report. We value the feedback from our franchisees and have a solid working relationship with them,” the company said in a statement emailed to USA TODAY.
In a note to investors, Kalinowski said McDonald’s U.S. competitive set is changing — for the worse: “Keep an especially close eye on fast-rising, privately held Chick-fil-A.” The report criticizes the “bloated menu” at McDonald’s — which it says slows down drive-thru service times.
Franchisees question the prospects for a turnaround any time soon. On a scale of 1 to 5 — 1 ranking “poor” and 5 ranking “excellent” — the six-month outlook averaged 1.81, the worst in the survey’s history. Not one franchisee surveyed said the six-month outlook was “excellent.”