Richard Adams

Richard Adams
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  • Refranchised And Repurchased: Restructuring Continues At McDonald's  [View article]
    Says something about the franchised restaurant business model when a huge multi-national company won't risk their capital running their own stores.
    Jan 27, 2016. 11:42 AM | Likes Like |Link to Comment
  • Refranchised And Repurchased: Restructuring Continues At McDonald's  [View article]
    Refranchising = It says something that large restaurant companies no longer want to be in the restaurant business.
    Jan 27, 2016. 01:17 AM | 1 Like Like |Link to Comment
  • Still Short McDonald's At $120  [View article]
    In addition to the soft comps, as you pointed out, the sales increase in the USA was due to three other factors, 1) mild weather in November and December in the eastern part of the country, 2) menu price increases taken by franchisees to offset the losses anticipated from the McPick2 promotion, and hype around all-day-breakfast. This is far more than just Egg McMuffins at lunch.
    Jan 26, 2016. 04:34 PM | 3 Likes Like |Link to Comment
  • McDonald's: The Confession Of A McGriddle Junkie  [View article]
    Before writing about McDonald's one should visit a McDonald's. They don't serve McGriddles at lunch. The "rest of day" breakfast menu is limited. The sales increase in the USA was due to three factors, * mild weather in November and December in the east part of the country, * menu price increases by franchisees trying to make some money before the McPick2 promotion, and hype around all-day-breakfast.
    Jan 26, 2016. 02:29 PM | 1 Like Like |Link to Comment
  • Franchisees warming up to McDonald's all-day breakfast  [View news story]
    Franchising is a constant tug of war. The corporate side (and shareholders) always make money on sales increases because they take a percentage off the top. Sales increases may or may not be profitable for franchisees who have to survive on the bottom line.
    Jan 21, 2016. 01:38 PM | 2 Likes Like |Link to Comment
  • Franchisees warming up to McDonald's all-day breakfast  [View news story]
    Nomura's previous franchisee survey was conducted right in the middle of the roll- out of breakfast all day. There was much angst among franchisee because MCD management had earlier committed to reducing the size and complexity of the rest of the menu but only made baby steps in that direction. A complete reading of the current survey show mixed opinions from franchisees on breakfast all day.
    The healthy results from Q4 are due to mild weather in November and a balmy December (first three weeks) and menu price increases to cover the cost of the McPick2 promo.
    Jan 20, 2016. 03:42 PM | Likes Like |Link to Comment
  • Elevation Portfolio Day 2: Specific McDonald's Trade  [View article]
    McDonald’s USA won’t know if All Day Breakfast is working until late in the
    spring of this year. We need to see what happens when the advertising program
    moves on to other targets and the novelty wears off. And we need to see what
    happens when winter weather (mild or severe) isn’t impacting restaurant traffic.

    I’m not too sure where the writer gets the idea that the roll-out of All Day
    Breakfast only took four months? The discussions with franchisees on this
    topic started in late 2015 and corporate management made it clear at a
    “turnaround” meeting in early March 2016 it was going to happen.

    This implementation couldn’t have been simpler, the ingredients were already in
    the supply chain and in the restaurants. There was little new equipment needed
    and no remodeling. Compare that to the roll-out of McCafe which took the better
    part of three years.

    Nothing is quick or simple in a huge chain predominantly run by franchisees.
    Jan 19, 2016. 12:56 PM | Likes Like |Link to Comment
  • McDonald's Hits $120: Exploring The New Narrative  [View article]
    "any weak store level operating margins for franchisees will discourage potential franchisees from opening restaurants."

    McDonald's franchisees have no say-so or involvement in when and where new restaurants are opened. That's all done by corporate and corporate decides which franchisee will be offered the location. The franchisee who gets the offer can turn it down, and many do, but McDonald's can always find another franchisee to open the restaurant.
    Jan 6, 2016. 05:24 PM | Likes Like |Link to Comment
  • Which chain is winning Chipotle's traffic?  [View news story]
    I've always considered McDonald's to be the world's safest place to
    eat because of the relatively small number of closely controlled suppliers.
    The idea of a large restaurant chain "sourcing locally" sounded risky -
    and for Chipotle it has been.

    In addition, Chipotle does not have an army of locally based franchisees helping to keep an eye on the suppliers, it all has to be done from the corporate office(s).
    Dec 21, 2015. 04:21 PM | 6 Likes Like |Link to Comment
  • Which chain is winning Chipotle's traffic?  [View news story]
    All SSS results for December '15 for QSRs and fast casual will be distorted by warm weather and cheap gas. Everyone will look good and corporate CEOs will take many victory laps, as though they control the weather.
    Dec 21, 2015. 04:18 PM | Likes Like |Link to Comment
  • McDonald's: I Am Lovin' It, But More Work Is Needed  [View article]
    The NPD data does not mean much because it was done during the introduction of all day breakfast when McDonald's USA was spending millions of $ in advertising the launch which not only raised awareness but caused many customers to try breakfast at odd hours just for the one-time novelty. We won't know the real impact of all day breakfast until next spring.

    As for "rebranding" to compete with CMG or SHAK - that's just not going to happen. McDonald's management is obsessed with "value" and in three weeks will relaunch the Dollar Menu with something called McPick 2 for $2.00. Since 2002 McDonald's has been proving that they can't have a bottom feeder menu and a high end menu in the same restaurant.
    Dec 13, 2015. 01:28 PM | 1 Like Like |Link to Comment
  • Momentum Will Drive McDonald's Stock Higher  [View article]
    Interesting the author believes in giving "more power to local managers" and
    then goes on to disagree with real McDonald's franchisees on all day breakfast.

    Nevertheless, if all day breakfast was wildly popular it might create some
    kitchen chaos but if they only sell a few breakfast items they can handle it -
    but it might not build traffic. Management does not appear confident since
    they put a ton of pressure on franchisees to do the 2 for $2.00 promo in
    Nov 24, 2015. 11:08 PM | Likes Like |Link to Comment
  • Why You Shouldn't Short McDonald's  [View article]
    It's important to keep franchisees motivated to increase sales. While everyone wants to see sales increase it is possible to increase sales and not boost profits. The two for $2.00 promo planned for January might be such an event.
    If an initiative has large upfront costs or poor margins it will be rejected by franchisees
    Nov 22, 2015. 05:14 PM | 1 Like Like |Link to Comment
  • What To Expect From A McDonald's Domestic REIT  [View article]
    A REIT in any form has the potential to rip apart the McDonald's franchise model. The MCD franchise is a two part package, franchisees sign, 1) a franchise agreement and, 2) a lease agreement for that location. The terms run concurrent, usually for twenty years. This has been the practice for nearly 50 years (in the USA).

    Having a "third party" REIT making decisions about the real estate separate from the franchise decisions would be such a change to McDonald's culture and business practices that it would likely do great harm to the entire system.

    It wouldn't make sense to have re-franchised all those McOpCos and then wreak the franchise program.
    Nov 4, 2015. 08:18 PM | 1 Like Like |Link to Comment
  • McDonald's All-Day Breakfast: Initial Success Will Be Overshadowed By Long-Term Despair  [View article]
    Needless to say, if mmears' experience is common it spells disaster for McDonald's domestically.

    McDonald's management has been admitting for several years that the menu is too large and the restaurant operation too complicated, something franchisees had been saying for a decade. They made some menu reductions over the summer but not enough. Now they've dumped a portion of the breakfast menu into the rest of the day. If they lose customer visits due to slow service it won't show up right away, folks will give them a few chances but will eventually give up and go to Taco Bell where there is no line. If there is a negative impact it will show up in February/March.
    Oct 18, 2015. 03:58 PM | 2 Likes Like |Link to Comment