McRevolt: The Frustrating Life of the McDonald's Franchisee (2015)(bloomberg.com)
bloomberg.com
McRevolt: The Frustrating Life of the McDonald's Franchisee (2015)
https://www.bloomberg.com/features/2015-mcdonalds-franchises/
85 comments
You're being charitable. It's downright bad, even compared with various other franchises on an item by item basis. The last time I ate in one back in 2008 because nothing else was open that early, I had a breakfast that consisted of scrambled eggs, hash browns, pancakes, and sausage. Everything tasted almost identical - an oily salty mound - with only different chew textures. (Okay, maybe the sausage had a little extra zing from the spice mix, but that was definitely the only tip off). But McDs always was dirt cheap, and their calorie to dollar ratio for (reasonably freshly) prepared food has been tough to beat. If they can't hold the line on prices, I don't see what's left to keep them from losing market share. And I wouldn't miss it one bit.
No doubt, the food in McDonalds is bad. But it's very distinctive. You can buy a burger and fries at any number of joints, but you can only buy a McDonalds Big Mac and McDonalds fries at McDonalds.
You could call it Hershey Syndrome. Hershey's chocolate is not very good. In fact, it tastes like vomit. Yet the entire US has grown up eating Hershey bars.
Hershey don't compete on quality, they compete on "Hersheyness".
Likewise, McDonalds can't simply improve quality, because they would be losing their very essence in the process.
You could call it Hershey Syndrome. Hershey's chocolate is not very good. In fact, it tastes like vomit. Yet the entire US has grown up eating Hershey bars.
Hershey don't compete on quality, they compete on "Hersheyness".
Likewise, McDonalds can't simply improve quality, because they would be losing their very essence in the process.
You definitely bought the wrong thing. You tried to order a normal diner breakfast at McDonald's. They don't do that well. You wanted to get one of their sandwiches -- Egg McMuffin, etc -- which, while not really like any other normal breakfast, certainly has that distinctive taste everyone here is talking about.
It's the old one-size-fits-all-(but-badly) problem. If you want to maximize your target customer base, the taste of the food becomes very bland. So they try to compensate by adding more items to the menu - and subsequently run into the problems described in the article.
Happy meals are a big thing. Huge. Also the new menu helps with the guac/dijon additions. Egg McMuffin has always been huge and the new coffee is way better than before.
But they could make a better burger. I heard the McAngus was great. They should bring that back.
But they could make a better burger. I heard the McAngus was great. They should bring that back.
I once heard that McDonalds was the largest toy distributer in the U.S. not Toys-R-Us, McDonalds. Not sure if it's still true, but Happy Meals are definitely a big thing. I grew up with them; many of is did.
I think the Big mac and McNugget have a very unique taste and cant say I've heard of or tasted any competitors versions of these that actually tasted similar. Im surprised to see a few people agree with the bland opinion.
I always loved their dollar menu, but these days it seems crappier in both selection and price.
I find the redeeming factor to be customizability. A McDouble with tomato, no pickles, lettuce, and Big Mac sauce for about a dollar? Yes, please!
Unique is the word. This is not a good thing—what exactly is a mcnugget if not fried chicken?
I actually like the food. But I never go to McDonalds, because I can eat a full day's worth of calories in one meal and still be hungry. I don't know how they do it.
As much as I hate McDonald's and know that their food is unhealthy garbage, your statement is completely false.
I'm glad you know how much I can eat at McDonald's before feeling sated.
What a dumb thing to say.
What a dumb thing to say.
Big mac: 500 calories
Large Fries: 440 calories
Blueberry muffin: 400 calories
Medium coke: 170 calories
Total 1500 calories.
That's close to recommended daily calorie values (2000 for women, 2200 for men).
Large Fries: 440 calories
Blueberry muffin: 400 calories
Medium coke: 170 calories
Total 1500 calories.
That's close to recommended daily calorie values (2000 for women, 2200 for men).
Salt.
I worked in a franchisee-owned McDonalds circa 2011 and I agree with the sentiment of this article. At the time they were trying to be all things to all people. Instead of focusing on their core strength: burgers and fries, they expanded an already crowded menu by introducing items like the McWrap and Fish McBites that nobody really wanted. Since then I think they've been trying to turn things around by trimming the fat from the menu ("getting back to basics") and actually responding to what customers want by doing things like introducing all-day breakfast.
Also, I got the sense that they don't have a great relationship with their franchisees. For example, there's a special salt shaker called AccuSalt[0] that the McDonald's Corporation requires franchisees to own which costs hundreds of dollars if I remember correctly. It's a total ripoff because the thing is a cheap plastic POS that breaks whenever it's dropped and franchisees aren't allowed to buy a generic one. As a result of this and probably 100 other little things, I once heard that the franchisee I worked for got the McDonald's Corporation to fly out an HVAC tech across the country to fix a thermostat out of spite.
[0]: https://www.sonoco.com/productsandservices/plastics/accusalt...
Also, I got the sense that they don't have a great relationship with their franchisees. For example, there's a special salt shaker called AccuSalt[0] that the McDonald's Corporation requires franchisees to own which costs hundreds of dollars if I remember correctly. It's a total ripoff because the thing is a cheap plastic POS that breaks whenever it's dropped and franchisees aren't allowed to buy a generic one. As a result of this and probably 100 other little things, I once heard that the franchisee I worked for got the McDonald's Corporation to fly out an HVAC tech across the country to fix a thermostat out of spite.
[0]: https://www.sonoco.com/productsandservices/plastics/accusalt...
It ensures the proper amount of salt in the proper pattern is dispensed. Are there generic ones available?
The idea behind tools like this is uniform product preparation. Fries in one McDonalds are almost identical to fries in another.
The idea behind tools like this is uniform product preparation. Fries in one McDonalds are almost identical to fries in another.
I understand the supposed reasoning, although in my own experience the uniformity of the fries is very spotty nonetheless. Usually employees don't spread the salt properly or they don't hold the shaker long enough for all the salt to properly dispense anyway. This negates any benefit of the AccuSalt.
Instead there are generic shakers that could get a very similar result with some training, even though they don't have a built-in measure. All commercial kitchen supply outlets have them.
Better yet, when kitchen staff are ultimately replaced by robots (or the salt dispenser gets built in to the fry station) this won't be an issue anymore.
Instead there are generic shakers that could get a very similar result with some training, even though they don't have a built-in measure. All commercial kitchen supply outlets have them.
Better yet, when kitchen staff are ultimately replaced by robots (or the salt dispenser gets built in to the fry station) this won't be an issue anymore.
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Behind the Arches is a great book on the topic of McDonalds. The author argues all their biggest successes came from new product ideas that were forced onto corporate by franchisees who insisted they knew what customers wanted. Meanwhile every product invented by HQ flopped (Kroc was notorious for this).
I'd love to know where the new products in this article come from.
http://www.goodreads.com/book/show/341643.McDonald_s
I'd love to know where the new products in this article come from.
http://www.goodreads.com/book/show/341643.McDonald_s
From what I understand, when McDonalds was cratering around when this article was written, they came up with all day breakfast. I've read several writings from franchisees complaining about the complexities of that and how it would cost them in kitchen renovations. Apparently the all day breakfast revitalized sales and McDonalds is on track for a rebound.
From the number of times in my life I've pulled up to a McDonalds drive through looking for breakfast only to find I misjudged the time slightly (and left, because I'm not in the mood for a burger at 10 AM), or the times I looked and found I couldn't because it was already a bit too late, I can totally believe this. Jack in the Box became a go-to for me in college for exactly this reason. Morning classes let out, it's 9:45 or 10, not enough time to get McDonalds breakfast, but I can always get breakfast at Jack in the Box, even if I prefer McMuffins.
Largely a moot point now, since I try to eat fast food sparingly, but boy do I wish they had all day breakfast when I was in my early 20's.
Largely a moot point now, since I try to eat fast food sparingly, but boy do I wish they had all day breakfast when I was in my early 20's.
I always wondered what kind of reasoning was behind that 10 am cutoff-point. Who the heck wants to eat a burger before, say, 11 am?
i believe it was 1030 for mcdonalds and the reasoning was they needed to start prepping for the 11am/lunch shift and there was only so much grill space for burgers/buns vs mcmuffins/toast/pancakes. i don't know what changes mcdonalds enforced to keep it going past 1030 now (just mandate now?)
They keep the grill at different temperatures for breakfast vs lunch, which is why all day breakfast required kitchen renovations.
In Sweden the cut-off/switch time is 10:00. It has been this time for a very, very long time.
I feel like only America eats crappy food like McDonalds and everywhere else they eat fresh wholesome food every day. Hearing that they have McDonalds in other countries just makes me sad.
[deleted]
ah okay. i was thinking about in the states.. which was 10:30ish
I think it varied a bit by store.
I told an acquaintance who worked McDonald's in their teens about the transition to all-day breakfast, and was informed that I must be mistaken, the logistics were completely impossible.
The logistics were impossible without a kitchen remodel, because they cooked the eggs and the burgers on the same grills, but at different temperatures. The remodels included new equipment and a completely new kitchen workflow.
Large grills usually have two sides with two temperature controls.
I for one would. They are leaving money on the table by not serving burgers anytime anybody wants a burger.
Same for me. I really don't like breakfast foods, and it's very difficult to grab a burger in the morning. Every place seems to serve the same boring morning breakfast until 10:30am. (And McD's breakfast seems overpriced for what they deliver.)
I do. I don't care for their breakfasts; I'd rather have an all-day lunch/dinner menu. For some people, their lunch or dinner times could be between 5 and 10 am.
It is very primitive thinking to base the content of your meals off of their cultural value rather than their nutritional value.
You should figure out your TDEE, macronutrients and micronutrients and base meals off of that. Burger at 8am? Who cares if it's what you need.
You should figure out your TDEE, macronutrients and micronutrients and base meals off of that. Burger at 8am? Who cares if it's what you need.
It kinda feels like McDonalds is being held back by their franchisees. I guess that is the downside to doing business that way.
Basically they don't take any working capital on their books this way it's all held by the franchisee.
Also, liability for the fast food workers would be with the franchisee and not the corporation. I don't know in the US but in my country, if you have more than around 50 employees or you are a public listed company, you are held to much higher labor standards than of you are a small company.
Also, liability for the fast food workers would be with the franchisee and not the corporation. I don't know in the US but in my country, if you have more than around 50 employees or you are a public listed company, you are held to much higher labor standards than of you are a small company.
A rebound? I remember reading somewhere(probably HN) that McDonald's makes most of its money from franchise locations rent, so I assumed as long as franchisees are keeping up with their payments their product line is not gonna affect the bottom line that much, I am not an expert on the subject though.
If you had read the article you would see that a) they also take a cut of revenue, and b) if no one is willing to franchisee (e.g. fund) a restaurant what happens to it?
The product line is the value McDonalds provides to it's customers (the franchisees) if that value decreases then the money it gets paid by it's franchisees in aggregate decreases.
The product line is the value McDonalds provides to it's customers (the franchisees) if that value decreases then the money it gets paid by it's franchisees in aggregate decreases.
They'd been serving breakfast items all day in other countries for decades. Hong Kong springs to mind as a place you could definitely buy an Egg Mc Muffin anytime of day.
Anyone remembers the scene at the fast food with Michael Douglas ordering breakfast in Falling Down?
https://www.youtube.com/watch?v=zJs9p-VNORw
https://www.youtube.com/watch?v=zJs9p-VNORw
I love this movie. I don't want to spoil anything but I wish it was happier.
An old family friend of my Dad's is a franchisee, he has the only two stores in the country town I grew up in.
He says it's literally a license to print money, and he is now obscenely rich.
He says it's literally a license to print money, and he is now obscenely rich.
I'm a huge fan of McDonald's, just not a big fan of their food.
> McDonald's exemplifies the role of small businesses in Americans' upward mobility. The company is largely a confederation of small businesses: 85 percent of its U.S. restaurants -- average annual sales, $2.2 million -- are owned by franchisees. McDonald's has made more millionaires, and especially black and Hispanic millionaires, than any other economic entity ever, anywhere.
http://www.washingtonpost.com/wp-dyn/content/article/2007/12...
> McDonald's exemplifies the role of small businesses in Americans' upward mobility. The company is largely a confederation of small businesses: 85 percent of its U.S. restaurants -- average annual sales, $2.2 million -- are owned by franchisees. McDonald's has made more millionaires, and especially black and Hispanic millionaires, than any other economic entity ever, anywhere.
http://www.washingtonpost.com/wp-dyn/content/article/2007/12...
Maybe if McDonald's didn't exist, there would be a more competitive franchise market and those small businesses would have made even more money.
I have no idea if that's likely or not, but without that analysis, it's no different than saying that Lamy make the book American Gods possible, just because Gaiman used one of their pens.
I have no idea if that's likely or not, but without that analysis, it's no different than saying that Lamy make the book American Gods possible, just because Gaiman used one of their pens.
Maybe if McDonald's didn't exist, there would be a more competitive franchise market and those small businesses would have made even more money.
I'll never be able to find the original reference, but apparently, chain stores can have a "market making" effect that mitigates the harm they do to consumer choice at the local level.
Starbucks used to take a lot of criticism for displacing indy coffeeshops, for example. Then, someone pointed out that a huge proportion of indy coffeeshops never existed in the first place until Starbucks normalized the idea of selling coffee and related beverages at extremely large markups.
So arguably McDonalds has opened the way for other burger restaurants and chains to enter the market, rather than blocking it.
I'll never be able to find the original reference, but apparently, chain stores can have a "market making" effect that mitigates the harm they do to consumer choice at the local level.
Starbucks used to take a lot of criticism for displacing indy coffeeshops, for example. Then, someone pointed out that a huge proportion of indy coffeeshops never existed in the first place until Starbucks normalized the idea of selling coffee and related beverages at extremely large markups.
So arguably McDonalds has opened the way for other burger restaurants and chains to enter the market, rather than blocking it.
>it's no different than saying that Lamy make the book American Gods possible
I have to say I think this is a pretty big leap. True, you can't do a controlled experiment with no McDonald's in the market to see what would have happened. But that doesn't mean you immediately throw up your hands and say "no useful or meaningful knowledge to be gained here because we can't do an impossible study." You might not get to 100% certainty but you can definitely figure some stuff out about how things are probably working, and the magnitude of the impact of the McDonald's system.
I have to say I think this is a pretty big leap. True, you can't do a controlled experiment with no McDonald's in the market to see what would have happened. But that doesn't mean you immediately throw up your hands and say "no useful or meaningful knowledge to be gained here because we can't do an impossible study." You might not get to 100% certainty but you can definitely figure some stuff out about how things are probably working, and the magnitude of the impact of the McDonald's system.
You're agreeing with me :) that's the "without that analysis" part of my post. I just don't see it in that article.
I'm not sure. The statement, without analysis, still makes a kind of independently true point (more millionaires made) and would lend itself to reasoning through. The statement you compare it with is obviously false and no amount of analysis could change that. I dunno. Not a huge deal in any case :)
There's a large and thriving open market of franchise opportunities. McDonalds isn't somehow forcing potential franchisees to buy McDonalds franchises or preventing them from choosing a better opportunity should they find one.
Sure, but those other franchises do not tend to make people millionaires.
Are you saying we shouldn't be happy about McDonald's making more minority millionaires than any other entity, because maybe if McDonald's was never founded, some other entity would exist that would make even more minority millionaires? How about we all just be happy that McDonald's did a good thing
I love untestable hypotheses because you can imagine them as whatever level of success or failure you prefer in order to denigrate reality.
Win!
Win!
The all-day breakfast brought them more of my business. I really like the Egg McMuffin. But, the burgers are nothing to write home about - they're thin and not that juicy, and seem to be mostly bun.
Their competition (Wendy's, Burger King) aren't really making good burgers either. I'm lucky that Austin has a wide choice in burgers from various independent restaurateurs.
Their competition (Wendy's, Burger King) aren't really making good burgers either. I'm lucky that Austin has a wide choice in burgers from various independent restaurateurs.
Hardee's/Carl's Junior has ridiculously good burgers for a fast food joint. I gotta say though, since we got a Five Guys I don't even bother with them anymore if I want a quick burger.
Five Guys isn't quick by fast food standards. In my experience you wait ten minutes after you order. They are also more expensive.
Their burgers are much better though.
Their burgers are much better though.
You can order on the walk over. Ready when you arrive.
To me the Hardee's burgers are just like Burger King.
have no way of telling if that's a compliment or complaint...
Have you had any of the never-frozen Wendy's? Vastly improved over the last few years.
I'm fairly sure Wendy's has always used fresh beef. "Fresh, not frozen" was a slogan in their stores when I was growing up in the '70s and '80s. As far as I know, the only shift a few years ago was to refocus their marketing efforts.
Refrigerated beef is McD's next attempt at a market revival. It's being pilot tested in Texas and is supposed to expand soon.
I think their patties are too thin, but I like the 4/$4.
My kids love McDs, but I would almost never go there for them until all day breakfast started. In my case, the presence of all day breakfast doesn't just increase my breakfast buying from then, it also increases the amount of burgers, fries, and McNuggets that I buy. If my local franchise gets rid of all day breakfast, they will lose virtually all of my business.
McDonalds franchisees print money and don't really need to know much. I don't shed tears for them.
If they wanted to think, they should have kicked a different business.
If they wanted to think, they should have kicked a different business.
he says one recent morning as he sits in the Hastings McDonald’s, sipping a skinny vanilla McCafé Latte. Such “foo-foo coffee,” as he calls espresso and its variants, is partly why he bailed: He loves the taste, but the complexities of making it came to epitomize his disillusionment with McD’s. “The service times went up
If McDonalds didn't sell this hard to prepare "foo-foo coffee" then potential patrons will just go across the street to Starbucks... and pick up a sandwich there for lunch too.
I can see why a complex menu creates financial and operational demands on restaurants, but driving customers to other restaurants does too.
If McDonalds didn't sell this hard to prepare "foo-foo coffee" then potential patrons will just go across the street to Starbucks... and pick up a sandwich there for lunch too.
I can see why a complex menu creates financial and operational demands on restaurants, but driving customers to other restaurants does too.
Mcdonalds could really benefit from having robot delivery drivers.
If I could order a burger combo and have it dropped off at work or home, and be cheaper than an entire pizza plus tip, i'd order from it way more often than I should.
If I could order a burger combo and have it dropped off at work or home, and be cheaper than an entire pizza plus tip, i'd order from it way more often than I should.
I've seen a couple business attempts at McDonald's delivery. They never lasted very long.
Elaborate? I know they deliver in Hong Kong, and New York to great success. Though they have human delivers.
They recently announced a partnership with Uber for delivery.[0]. Granted, I don't use Uber for various reasons that the HN community is well aware of, but delivered McD's is coming.
[0] https://www.mcdonalds.com/us/en-us/mcdelivery.html
[0] https://www.mcdonalds.com/us/en-us/mcdelivery.html
A woman who managed a McDonalds here in Canada sued:
http://www.cbc.ca/news/canada/newfoundland-labrador/newfound...
http://www.cbc.ca/news/canada/newfoundland-labrador/newfound...
> The franchise Jarvis bought in 1981 [...] he had to take a Small Business Administration loan at the Jimmy Carter-era interest rate of 16 percent.
Oh yeah, I remember that era. 1981, just after Carter's re-election.
Oh yeah, I remember that era. 1981, just after Carter's re-election.
interest rates didn't come down immediately after reagan's election. interest rates for mortgages, for example, were still in the mid-teens in the early 80s.
http://www.freddiemac.com/pmms/pmms30.html
If you look, rates were typically in the 8s up through midway through Carter's term, then spiked in to 9, 10, 11, then 12-16 in 1980, and it took most of Reagan's 2 terms to come back down to the 9 range.
Someone in 1981 would still be thinking of Carter's effects on interest rates, and the rates were "Jimmy Carter-era". They were also "Reagan-era", but not many people point the finger at him for rates going to 16, since he wasn't even elected when that happened.
http://www.freddiemac.com/pmms/pmms30.html
If you look, rates were typically in the 8s up through midway through Carter's term, then spiked in to 9, 10, 11, then 12-16 in 1980, and it took most of Reagan's 2 terms to come back down to the 9 range.
Someone in 1981 would still be thinking of Carter's effects on interest rates, and the rates were "Jimmy Carter-era". They were also "Reagan-era", but not many people point the finger at him for rates going to 16, since he wasn't even elected when that happened.
Thanks for the table! I was looking at prime rate tables, but those moved more or less in parallel. I believe we're more or less agreeing on the facts, but differ on the interpretation.
The rates in 1977 and 1978 were lower than any in Reagan's two terms. Conversely, rates in 1981, 1982, and (barely) 1984 were HIGHER than any in Carter's term.
Sure, Carter's policies had some effect on those interest rates, inasmuch as he made Paul Volcker Fed Chairman. However, the high interest rates were necessary to bring down inflation rates, which started spiking under Nixon/Ford, and Reagan's massive budget deficits did not exactly help either.
So putting the August 1981 interest rate on Carter's doorstep smacks a bit of partisan bias (hardly unsurprising in a magazine owned by a perennial GOP presidential candidate), though admittedly with a bit more justification than e.g. blaming 1992 events on Bill Clinton's presidency.
The rates in 1977 and 1978 were lower than any in Reagan's two terms. Conversely, rates in 1981, 1982, and (barely) 1984 were HIGHER than any in Carter's term.
Sure, Carter's policies had some effect on those interest rates, inasmuch as he made Paul Volcker Fed Chairman. However, the high interest rates were necessary to bring down inflation rates, which started spiking under Nixon/Ford, and Reagan's massive budget deficits did not exactly help either.
So putting the August 1981 interest rate on Carter's doorstep smacks a bit of partisan bias (hardly unsurprising in a magazine owned by a perennial GOP presidential candidate), though admittedly with a bit more justification than e.g. blaming 1992 events on Bill Clinton's presidency.
Thanks. I don't think it's out of line to give some blame to Carter for the rates in Aug 81 - it still would have been on his budget's watch, although I'm not sure that many people think that deeply about it. It's probably a bit partisan, but I don't remember my parents blaming Reagan for 16% interest rates when getting a loan in 1981.
How times have changed:
https://en.wikipedia.org/wiki/Big_Mac#History
https://en.wikipedia.org/wiki/Big_Mac#History
People had trouble pronouncing "the aristocrat"?!
McDonald's used to have a third pounder burger, but it didn't end up selling well because people thought it was lighter than a quarter pounder.
The 1/3 pounder was an A&W and thing not McDonald's. I know because A&W is huge in Okinawa.
This article made my chrome tab use 8gb ram and slowed down my computer. They're doing client side bitcoin mining or something.
McDonalds problem is the same problem they've always had. The food just isn't very good. It never was. No amount of spiffing up the storefront or juggling menu items can help them when competition the likes of the above moves in. All they're doing is driving their prices higher which helps the competition even more.