All Is Not Well With McDonald’s Corporation (MCD), Reveals Latest Survey


McDonald’s Corporation (NYSE:MCD) is no longer at ease, even with its franchisees. Escalating competition and falling sales are some other challenges the restaurant operator is battling. Efforts to simplify the menu and the introduction of customizable offerings aren’t getting the support they need as partners term some of the moves as being too expensive to implement.

A survey, by Janney Capital Markets, has found that the franchisees are wary about the future of McDonald’s Corporation (NYSE:MCD).

New rating lows

McDonalds’ rating among franchisees hit new lows in the latest survey, which captured opinions in areas such as domestic outlook and relationship. The survey captured views from 215 franchisee locations in the U.S.

Intense competition

According to one of the respondents, there is the risk that McDonalds’ system will continue to fall and even fail more. The reason is that recent changes don’t seem to work, as the company has been talking about menu reduction while adding of new products isn’t improving sales. MCD is facing stiff competition in the U.S., especially against privately held operators such as Chipotle Mexican Grill and Chick-fil-A.

Expensive initiatives

The other issue that is breaking down McDonald’s Corporation (NYSE:MCD) is that it has come up with new initiatives that look too expensive for franchisees to implement. However, McDonald’s hopes that allowing customers to customize their tastes would encourage them to pay more, thereby boosting sales and profits.

The strategy has worked at places like Shake Shack and McDonald’s hopes it can replicate it.

Obscure turnaround plan

The other thing that worries franchisees is that McDonalds’ turnaround plan is devoid of a clear game-plan to drive the changes desired. The company is further blundering by attempting to be all things for everyone, which will lead to a baggy menu, but without much to show for it.

Wage issue

The wage hike is also another area that franchise operators believe that McDonald’s Corporation (NYSE:MCD) has betrayed them. The company raised minimum wages at the stores in owns, leaving franchisees to catch up with the seemingly expensive move.

Company retorts back

McDonald’s has said it values feedback from franchisees and has a solid working relationship with them. The company dismissed the survey saying that less than 1% of franchisees were surveyed and that the company values the feedback and solid working relationship with them.

Nearly 90% of McDonald’s locations fall under franchisees and the company needs them on board to move forward with changes.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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