Richard Adams

Richard Adams
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  • Why All-Day Breakfast Isn't Enough To Save McDonald's  [View article]
    I'm glad you're a happy customer. If you're a McDonald's shareholder - -
    does it bother you that the franchise owner lost money on that transaction?
    Sep 22, 2015. 10:21 PM | Likes Like |Link to Comment
  • Why All-Day Breakfast Isn't Enough To Save McDonald's  [View article]
    During the first weeks of October analysts and reporters will wander through McDonald's restaurants observing people eating breakfast at all hours. Of course many of the menu items being consumed will be obtained for free by way of coupons (print or digital) paid for by McDonald's franchisees. MCD watchers won't know that and will be impressed with what they see.

    So there will be something exciting to discuss on the late October analyst call and chances are good that results for the fourth quarter will please shareholders when announced in January because:

    * The massive amount of advertising against all day breakfast.

    * National and local coupons and discounting efforts.

    * Sales in the USA went negative in the fourth quarter of 2013 so there's a good chance that "lapping" these two years of soft sales will produce some positive results for Q4 2015.

    The more sophisticated analysts will understand this lapping but some won't and reporters definitely won't so in late January there may be headlines proclaiming that McDonald's USA has been "turned around".

    And, since management no longer releases monthly sales results this perception could give them cover through the spring earnings release and the 2015 shareholders meeting.

    We won't know what real impact all day breakfast really has until mid-2016,
    unless it's an operational disaster and slows down service times. Then regular menu customers will go elsewhere and short term result could be negative.
    Sep 22, 2015. 02:58 PM | 1 Like Like |Link to Comment
  • McDonald's: Is Breakfast All Day A Step In The Right Direction?  [View article]
    Take it from an expert, the franchisees own the equipment, McDonald's Corp. controls the building. Franchisees pay for new equipment and the install.
    Sep 3, 2015. 07:16 PM | Likes Like |Link to Comment
  • McDonald's: Is Breakfast All Day A Step In The Right Direction?  [View article]
    "With about 14,000 U.S. locations, it's going to cost the company somewhere between $7 and $70 million to roll out this initiative. We'd rather see money being spent on this than in buying back stock."

    Excuse me but that's franchisee money that pays for the bulk of the roll out. Franchisee money cannot be used to buy back stock. At least MCD hasn't tried that - yet.
    Sep 2, 2015. 03:36 PM | 2 Likes Like |Link to Comment
  • McDonald's: Show Me The Real Estate  [View article]
    "In many cases, McDonald's charges a premium to franchisees for rent"

    Correction - In ALL cases McDonald's charges a premium for rent. The real
    estate has already been monetized through the McDonald's franchise package and there is no room in that business model for increased rent payments to a REIT.
    Sep 2, 2015. 01:53 PM | Likes Like |Link to Comment
  • Political issues slow broad Chick-fil-A expansion  [View news story]
    Chick fil A can do just fine by staying out of areas where the politics is stupid and poisonous. This is the best run chain in the quick service industry and there are plenty of fine communities that will welcome them.
    Aug 21, 2015. 11:52 AM | 15 Likes Like |Link to Comment
  • McDonald's: Time For Something Really Radical  [View article]
    Here's your problem - McDonald's is so over built in the USA that a new or acquired chain would compete directly with multiple local McDonald's locations and would cannibalize the top end of the McDonald's menu leaving the franchisee with the unprofitable bottom end of the menu. This would likely end up in numerous lawsuits and very expensive litigation with franchisees. This is why, during their previous flirtations with other brands, they stayed away from hamburgers. But even Chipotle was taking sales from nearby McDonald's and was starting to cause conflicts with franchisees, that's one of the many reasons they got out of Chipotle.
    Aug 19, 2015. 04:18 PM | Likes Like |Link to Comment
  • McDonald's Franchisees Are Unhappy. What's Next?  [View article]
    Franchisees are not employees, if this CEO isn't fair with them they will just ignore him until he goes away.
    Jul 22, 2015. 10:58 PM | 1 Like Like |Link to Comment
  • McDonald's Franchisees Are Unhappy. What's Next?  [View article]
    Trying to share the restaurant operating profit is very problematic. Bottom line profits vary broadly by individual restaurants and varies by franchisee. Some franchisees are great at meeting profit goals, some not so much. Having corporate dictating margins to franchisees would cause far more problems than exist today.
    Jul 22, 2015. 08:23 PM | Likes Like |Link to Comment
  • 5 Reasons McDonald's Shrinkage Is A Bullish Move  [View article]
    You would be wrong about closing 1/2 of the company owned stores. The history of MCD is that the company owned stores are higher than average volume over franchised stores. Not because they are better run but because the corp. is a less efficient operator and has a higher break even. Since the mid-1970s MCD has had a policy of selling lower volume corporate stores to franchisees (who can do a better job and raise sales).

    Why would they close high volume corporate stores when they can sell them to franchisees and book a profit?
    Jun 19, 2015. 03:23 PM | Likes Like |Link to Comment
  • 5 Reasons McDonald's Shrinkage Is A Bullish Move  [View article]
    The "owners" have no control over "substandard fare", they serve food designed and approved by MCD Corp. Franchisees do not source food. The owners do set the prices but most would dump things like the Dollar Menu ASAP.
    Jun 19, 2015. 02:54 AM | 3 Likes Like |Link to Comment
  • 5 Reasons McDonald's Shrinkage Is A Bullish Move  [View article]
    You’re three McDonald’s example is interesting but you’ve left out a complexity. It’s likely those are franchised restaurants. If any of the restaurants are newer they might have as much as 20 years left on the franchise. And the franchise will have a substantial investment in equipment and fixtures to write off. What if the franchisee just spent a million or two remodeling or rebuilding the restaurant? Can McDonald’s afford to buy them out of their contracts and then pay them back for their investment? A modest sales increase at the remaining location(s) will not make the franchisee whole.

    And closing the Wal-Mart location would not accomplish much as they are typically low volume and don’t draw much business from nearby freestanding locations.

    It was easy for Starbuck’s to close stores years back, they don’t have franchises and can just buy their way out of a lease and walk away.
    Jun 19, 2015. 02:37 AM | 1 Like Like |Link to Comment
  • McDonald's lower after detailing turnaround strategy  [View news story]
    McDonald's CEO Greenberg gave that same "turnaround speech" in 1998.
    May 4, 2015. 09:23 AM | Likes Like |Link to Comment
  • McDonald's tests drive-thru customization  [View news story]
    While this will still slow down the speed of service it's a far better approach than the absolutely brainless "Create Your Taste" platform.
    Apr 29, 2015. 01:43 PM | Likes Like |Link to Comment
  • McDonald's Is Aiming For Shock And Awe - What's On The Menu?  [View article]
    One cannot compare the roll out of the Egg McMuffin to making changes to McDonald's today. In those days McDonald's was 5% of the size it is today. Be it in the USA or globally, making big changes to McDonald's will take years, not months. The new CEO cannot make changes overnight but Wall Street wants results in the next quarter.
    Apr 27, 2015. 04:42 PM | Likes Like |Link to Comment