McDonald’s Corp. franchisees remained pessimistic concerning the company’s turnaround efforts throughout the much-hyped rollout of all-day breakfast, based on an internal survey.
Only about 14 percent of McDonald’s domestic franchisees think the chain’s comeback plan is working, according to is a result of market research of owner-operators obtained by Bloomberg News. And just 35 percent of franchisees are positive about McDonald’s long-term future success, a drop from 46 percent within the prior year. The survey, that the company conducts annually, was completed in October and November.
McDonald’s posted U.S. same-store sales growth of 5.7 percent for the fourth quarter, the best performance in almost four years. The organization cited its shift to all-day breakfast, in addition to mild winter months, for helping fuel the gain. In October, the company also reported positive sales in the U.S., lifted by a popular US$2.50 meal deal. The stock jumped 8.1 percent that day, the biggest increase in seven years.
Chief Executive Officer Steve Easterbrook, who took control of in March of this past year, has stated the company is dedicated to its turnaround plan, which includes “running great restaurants, driving operating growth, creating brand excitement and enhancing financial value.”
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Next Phase
“When we’re pleased with the recent positive momentum within the U.S., it will take a minimum of six more months of positive comparable sales and guest count growth to progress with the sustained and prolonged growth phases in our turnaround,” he said in January.
Lisa McComb, a spokeswoman for the Oak Brook, Illinois- based company, said the survey doesn’t reflect the greater recent progress the company makes.
“These answers are hardly surprising because of the survey was conducted before McDonald’s ended the entire year with momentum,” she said. “By refreshing old favorites, like our Egg McMuffin, introducing all-day breakfast and making other changes, we’re beginning 2016 in a better place than where i was Twelve months ago.”
McDonald’s ties using its franchisees are critical, especially in the U.S. From the company’s 14,000 domestic restaurants, about 90 per cent are independently owned. More than 3,000 domestic franchisees pay royalties and rent to the company. They also bring about advertising funds.
McDonald’s shares fell 1 percent to US$117.42 at 1:53 p.m. on Thursday. Through Wednesday’s close, the stock was up 0.4 per cent this year.
Strained Ties
The survey, including responses from 1,468 franchisees, also demonstrated that interactions between owner- operators and company managers, go downhill. Just 29 percent of respondents said that communication between franchisees and corporate leadership is open and honest, compared with 42 percent in 2014. On the positive note, more than half from the franchisees said their restaurant operations are superior to a year ago.
“We know that sustaining our growth means continuing to listen to both our customers and our franchisees and we are committed to doing just that,” McComb said.
Bloomberg News
