I saw a sad but not totally unexpected news item from John Hawkins this morning regarding one of America’s premiere dining outlets… McDonald’s. The House That Ronald Built has fallen on hard times, with some estimates indicating that a significant portion of the franchises are currently insolvent or seriously in the red. The dire warnings from franchise owners are including phrases such as, “these are the final days.” (Yahoo News)
McDonald’s franchisees believe the brand is in a “deep depression” and could be facing its “final days,” according to a new survey.
“We are in the throes of a deep depression, and nothing is changing,” one franchisee wrote in response to the survey by Nomura analyst Mark Kalinowski. “Probably 30% of operators are insolvent.”
Another wrote, “The CEO is sowing the seeds of our demise. 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.”
More than a dozen franchisees expressed frustration with McDonald’s management, saying that CEO Steve Easterbrook’s turnaround plan — which includes initiatives like all-day breakfast and a shift to digital ordering kiosks — is a distraction from the core issues of McDonald’s, like food quality and customer service.
“The lack of consistent leadership from Oak Brook is frightening, we continue to jump from one failed initiative to another,” one franchisee wrote.
We’ve talked about this here before and it’s been a regular feature of financial news headlines. McDonalds has been losing money right and left and they’ve been dumping massive resources into a seemingly endless array of marketing gimmicks as they try to turn their fortunes around. None of it seems to be working, and the reason may be that they’re not addressing the core issue which some of the franchisees are bringing up: the chain strayed away from their original core mission and the strength of their brand in response to social pressures of the day.