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Richard Adams

Richard Adams
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  • 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
  • McDonald's Has Activist Jana Partners As An Investor, So What? [View article]
    "giving local franchisees more control over tailoring service/menu/marketing to local markets." ..... This may or may not produce positive results. McDonald's is a 60 year old company and for the past 30 years it's been a very top-down culture. In the USA the company is divided into 22 regions based on geography and 160 plus advertising co-ops determined by media penetration. The corporate employees and franchisees are conditioned to taking orders from the home office. Creative and entrepreneurial types have been flushed out of the McDonald's system. Can the people in the field immediately switch from being good bureaucrats to creative types overnight? They could do more harm than good. The real purpose for this McSpin is to take the spotlight off the CEO and his home office team.
    Nov 19, 2014. 05:04 PM | Likes Like |Link to Comment
  • Rebuttal: McDonald's Isn't Unhealthy For Your Portfolio If 5% Growth Actually Happens [View article]
    "management appears to be aware of the problems facing the company" - true enough, but there's no evidence they know what to do about the problems. So far they appear to be determined to "reinvent" McDonald's and are risking breaking the McDonald's business model to gain a few % in sales growth.
    Nov 15, 2014. 03:51 PM | 3 Likes Like |Link to Comment