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Richard Adams

Richard Adams
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  • Should McDonald's Spin Out A McREIT? [View article]
    For a franchised chain there's another complexity - these McDonald's owned locations are already encumbered by franchise agreements and leases with franchisees. McDonald's could certainly transfer the ownership of corporate owned real estate to a REIT but they are still bound by the terms of that franchise agreement. McDonald's and the REIT would have no power to change the terms of the lease or modify the rent the franchisee pays. Until, of course, the end of the 20 year franchise at which time the franchisee can take new terms set by the REIT or walk away from the location.
    Mar 26, 2015. 11:22 PM | 1 Like Like |Link to Comment
  • Should McDonald's Spin Out A McREIT? [View article]
    I assume you post as a joke. You should visit a few MCD stores. Not that many have Playplaces, many have been removed.
    Mar 26, 2015. 07:13 PM | 4 Likes Like |Link to Comment
  • Should McDonald's Spin Out A McREIT? [View article]
    You're right. They've been playing around with the real estate portfolio for 20 years with zero transparency. They'll never let prying eyes in on what they've been doing.
    Mar 26, 2015. 06:23 PM | Likes Like |Link to Comment
  • Should McDonald's Spin Out A McREIT? [View article]
    If you've echoed Glenview's numbers correctly...their numbers are wrong.
    You write:

    "The majority of McDonald's restaurants are operated by franchisees that pay approximately 4 percent of sales in royalties. Additionally, where McDonald's also owns the real estate, Robbins estimated that the company receives 9 percent of sales as rent from the franchisees."

    The royalty is not "approximately" 4% - it is always 4%.

    All franchisees pay rent to McDonald's. It does not matter if the company owns the real estate or just leases the site from a third party and then sublets to the franchisee. The rent is a % of sales and can be as low as 8.5% on older stores to 15 - 20% on newer stores.

    It's scarey that they are making such big assumptions on bogus facts and figures.
    Mar 26, 2015. 05:17 PM | 5 Likes Like |Link to Comment
  • McDonald's shareholder group wants board changes [View news story]
    McDonald's has a long tradition of placing McDonald's suppliers on the BOD. While they've moved away from that somewhat over the years there is no way a supplier of goods and services to the McDonald's system can make tough calls about changes in management or policy.
    Feb 13, 2015. 08:46 PM | 1 Like Like |Link to Comment
  • January Was Much Better For McDonald's Than You Think [View article]
    Actually, U.S. sales were helped by milder weather in most of the country as compared to Jan. 2014.
    Feb 11, 2015. 12:28 PM | 2 Likes Like |Link to Comment
  • Why McDonald's Stays In Our 1% Portfolio [View article]
    Your investment conclusion may be correct but the build-a-burger thing is DOA. With only 30% of McDonald's customers coming inside the restaurant it just won't build sales. This is a drive-thru business. And, the 8 to 10 minute wait time will kill any repeat purchases. Franchisees are already balking at the cost of implementation and it's going to be tough to get them to invest any advertising money into such a silly idea. McDonald's is about speed, not sitting around waiting for your buzzer to go off.
    Feb 3, 2015. 01:20 PM | 1 Like Like |Link to Comment
  • McDonald's quandary: Step forwards or step backwards? [View news story]
    "If the company sticks with the plan, it might be without the full backing of franchisees."

    Nothing happens without the full backing of McDonald's franchisees. They are the ones who have to borrow the money to pay for corporate initiatives. "Create Your Own Taste" is unproven and a huge question mark. There's a good chance it'll be gone by mid-year.
    Jan 30, 2015. 01:58 PM | 1 Like Like |Link to Comment
  • Layoffs expected at Restaurant Brands International [View news story]
    Lots of this going around. McDonald's Corp. is also in the process of laying off what appears to be hundreds of people.
    Jan 27, 2015. 04:28 PM | Likes Like |Link to Comment
  • McDonald's Isn't Cheap Yet [View article]
    "Again, we're interested to see the long-term effects of automation and kiosks in restaurants, but those innovations are unlikely to affect the stock price for quarters to come."

    Make that "years" not "quarters". The Build-A-Burger thing is unproven and does not apply to the 70% of the business that comes through the drive-thru. And, it will take years to get franchisee buy-in.
    Jan 26, 2015. 12:11 AM | 2 Likes Like |Link to Comment
  • Illustrating Why McDonald's Is Undervalued At Its Current Share Price [View article]
    You can't charge $8. / $9 / $10 for a meal at a restaurant that also offers a complete product line for $1 or $2. That's what killed the Angus line at McDonald's. One could buy a bag full of $1 sandwiches for the price of one Angus sandwich.
    Jan 22, 2015. 05:05 PM | 3 Likes Like |Link to Comment
  • Illustrating Why McDonald's Is Undervalued At Its Current Share Price [View article]
    “fully expect the stellar marketing team to work around the clock to ensure that the brand message of CYT will resonate with America.”

    First, if McDonald’s had a stellar marketing team the brand wouldn't be in this shape. But, it’s doubtful if the build-a-burger program will resonate with American if it’s only in half the restaurants and not available in drive-thru which represents
    65-70% of U.S. sales.

    But if you are basing a lot of assumptions on McCafe you have apparently been misled. The original concept for McCafe was a complete failure. That is the idea that McDonald’s could sell espresso drinks and compete with Starbucks. The typical McDonald’s sells very few espresso drinks no matter how much advertising money they waste on the product. McDonald’s franchisees tell me they don’t sell
    enough espresso drinks to pay for the electricity to run the espresso machine. And, now that the very expensive espresso machines are nearing the end of their life there is much talk among franchisees about dumping the entire espresso line.

    If the build-a-burger initiative holds as much promise as McCafe - McDonald’s USA is headed into some real problems.
    Jan 22, 2015. 04:51 PM | 2 Likes Like |Link to Comment
  • McDonald's is on a marketing mission [View news story]
    Can you trust them to "execute" if they are not executing now?
    Jan 15, 2015. 02:27 AM | Likes Like |Link to Comment
  • McDonald's is on a marketing mission [View news story]
    "Analysts expect a big marketing spend on Create Your Taste later this year."

    Wow, that would be a huge mistake! The MCD CEO says the Build-A-Burger program might be in 2,000 restaurants by the end of the year. That's about 15% of USA locations. And, since it doesn't apply to drive-thru Build-A-Burger only applies to about 30% of a freestanding McDonald's customers.

    That's 30% of the customers at 15% of locations.

    So by the end of this year only a tiny sliver of McDonald's customers will be exposed to Build-A-Burger. McDonald's can't have a "big marketing spend" against such a small availability of the product being advertised.

    Unless someone thinks it's a good idea to waste precious advertising funds.
    That's the last thing investors should want from McDonald's management.
    Jan 13, 2015. 11:13 AM | Likes Like |Link to Comment
  • Does McDonald's Need An Activist? [View article]
    The "ordering kiosks" you mention are in a tiny four restaurant test in the USA. Management intends to implement the program in 2,000 locations in 2015. Since it does not apply to drive-thru the "Build-A-Burger program will only be available to 25% to 30% of the typical restaurant's customers.

    If it works (and it probably won't) "Build-A-Burger" is two or three years away from having any measurable impact on sales in McDonald's USA.
    Jan 5, 2015. 10:06 AM | Likes Like |Link to Comment
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194 Comments
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