McDonald’s franchisees insolvent, depressed, leaderless – survey

Jim Young
Over two-dozen McDonald’s franchisees have expressed frustration with corporate management. They said its turnaround plan initiatives like digital kiosks and all-day breakfast were a distraction from the core business – food quality and customer service.

“We are in the throes of a deep depression, and nothing is changing,” one franchisee wrote in response to the survey, according to Business Insider. “Probably 30 percent of operators are insolvent.”

Franchisees said the brand could be facing “its final days.” They expressed frustration with the CEOs’s new initiatives, which seem to keep failing.

According to Business Insider, the company started “toasting its hamburger buns longer, making its beef patties slightly larger, and changing how the patties are seared.”

In March, McDonald’s announced plans to remove antibiotics from its chicken. Now some of its shareholders petitioned the company to drop antibiotics from all its meat.

"The CEO is sowing the seeds of our demise,” another wrote. “We are a quick-serve fast-food restaurant, not a fast casual like Five Guys or Chipotle. The system may be facing its final days."

Several franchisees complained about all-day breakfast, saying that it has complicated kitchen operations and goes against Easterbrook's repeated promises to simplify the menu.

"The system is very lost at the moment," one franchisee wrote. "Our menu boards are still bloated, and we are still trying to be too many things to too many people ... things are broken from the franchisee perspective."

There were complaints about the digital ordering kiosks instead of the company focusing on food quality and customer service. The "Create Your Taste" program, allows people to customize their burgers with premium ingredients.

"They are throwing everything they can against the wall to see what will stick," one franchisee wrote.

The company's reaction to franchisees’ frustration in the past has been to tell operators to "get out of the system" and quit the business, reported Business Insider. However, McDonald’s did not respond to media requests for comment on the latest survey.

Among the myriad of negative responses, two franchisees expressed hopeful attitudes.

"I think our leadership is headed in the right direction," one wrote. "It will take time."

In the survey, 29 US franchisees covering about 226 restaurants were interviewed by Nomura analyst Mark Kalinowski. McDonald's has more than 14,000 restaurants in the US.

The world’s largest burger chain has been trying to boost sales following seven straight quarters of declining sales in the US. The fast-food giant’s profits declined 13 percent, or $1.2 billion, in July, down from $1.39 billion a year ago.

In May the company announced a goal to cut $300 million in costs by the end of 2017 under its new CEO Steve Easterbrook, who began running McDonald’s in January in the midst of food quality scandals and plummeting sales. Those cuts resulted in 350 jobs losses at US headquarters and 90 overseas.

McDonald’s is the world’s second largest corporate employer after Walmart, with 1.9 million workers. It has over 36,000 restaurants worldwide with some 69 million customers a day.