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Richard Adams

Richard Adams
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  • 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
  • The CEO May Be McDonald's Secret Sauce [View article]
    McDonald's is not in a "crisis", they just have found it difficult to increase what are already huge average unit volumes. The biggest risk here is that management will try to "reinvent" McDonald's trying to please fussy shareholders.
    Nov 15, 2014. 03:12 PM | 1 Like Like |Link to Comment
  • The CEO May Be McDonald's Secret Sauce [View article]
    "He plans to add employees to assist in achieving a lower wait time." The CEO does not dictate staffing levels. The franchisees do that and they will not add staff to make up for poor corporate decisions.
    Nov 15, 2014. 02:22 AM | 10 Likes Like |Link to Comment
  • McDonald's Obsession With Starbucks [View article]
    History has shown that once McDonald’s executives achieve a certain level (probably when they get a personal limo) they no longer want to be “hamburger guys”, they want to be “restaurateurs”. This mindset drove management to run around acquiring other, more upscale chains, in the 1990s and it’s why they became obsessed with Starbucks in this century. Everybody in Oak Brook wants to be Howard Schultz.
    Nov 13, 2014. 05:18 PM | 3 Likes Like |Link to Comment
  • McDonald's Obsession With Starbucks [View article]
    McDonald's sells a lot of coffee, especially at the drive-thru during breakfast, but that's drip coffee. McCafe was originally about espresso and espresso drinks at McDonald's have been a massive failure. In fact, in terms of equipment costs, remodeling costs, and few billion $$$ in wasted advertising spending espresso drinks are the biggest new product introduction failure in the history of McDonald's.

    McDonald's franchisees tell me they don't sell enough espresso drinks to pay for the electricity to run the espresso machine.
    Nov 13, 2014. 05:05 PM | 5 Likes Like |Link to Comment
  • McDonald's Obsession With Starbucks [View article]
    They tested that extensively. There were dozens of test restaurants that had a separate "bistro" that served an entirely different menu and McCafe. All failed and were removed. Hence the downsized coffee corner next to the drive-thru.
    Nov 13, 2014. 04:24 PM | 1 Like Like |Link to Comment
  • Finally, Some Good News For McDonald's. Now Is The Time To Buy [View article]
    McDonald's is not going to "simplify" the menu or their operation. Instead, as mentioned in their press release, they are going for more "customization". This company is being run by people who know nothing about the restaurant business. They will continue to screw up the operation and stagnant sales.
    Nov 11, 2014. 01:30 PM | 1 Like Like |Link to Comment
  • The Case For McDonald's Potential Acquisition Of Chipotle: If You Can't Beat Them..Buy Them [View article]
    The problem with MCD expanding into other brands is that MCD is not run by restaurant people but by bureaucrats, accountants, and lawyers who have no idea what happens in a restaurant kitchen. Remember the late 1990s when MCD bought a handful of small chains, screwed them up, and sold them for a loss.
    Oct 24, 2014. 12:51 PM | Likes Like |Link to Comment
  • Strong family traffic to Chick-fil-A continues to pressure McDonald's [View news story]
    If you think Chick-fil-A food is bad you should not be allowed out of the house. The food is great - best in the industry. That's why they do $3 mill a year without Sundays.
    Oct 20, 2014. 03:41 PM | 1 Like Like |Link to Comment