McD's franchisees say the brand in 'deep depression' & 'facing its final days'

[Sophie Scholl]

"More than a dozen" complaining franchisees out of, what, 15,000?  I'd bet that, if you keep sample sizes this small, you could find that "McD's franchisees say that the earth is flat."

I thought the same thing, till I saw it was out of 29 random US franchisees who were polled.  I still think it is a rather crap argument and sensationalist journalism.

[Admiral Yi]

I thought the same thing, till I saw it was out of 29 random US franchisees who were polled.  I still think it is a rather crap argument and sensationalist journalism.

29 franchisees who own 226 restaurants.  It's not a terrible sample.

[DGuller]

It's not the size of the sample that matters, but rather its bias.

[Admiral Yi]

It's not the size of the sample that matters, but rather its bias.

The only bias i can see is it skews toward larger franchisees (assuming the average franchisee doesn't own 10 stores).

[DGuller]

I wasn't suggesting anything one way or the other.  I just thought that grumber's concern with the results was without merit.  It doesn't matter that you're surveying a small percentage of restaurants, as long as the sample size in absolute numbers is not ridiculously small.  What matters is how you're choosing your sample.  Is it representative or not?

[alfred russel]

"the survey by Nomura analyst Mark Kalinowski"

There are a lot of biases that could be in the survey. There could be response bias. Presumably responding was voluntary--perhaps the people more fearful about the state of the business were more prone to respond.

Also, Mark Kalinowski may have also biased the sample to prove a point. Perhaps a certain class of franchise owner was prone to respond in a certain way, and that was who was targeted. Perhaps the questions were leading. I have no idea who Mark Kalinowski is, but a google shows a year ago he was a bit bearish on McDonalds a year ago.

http://www.ajc.com/weblogs/biz-beat/2014/jul/16/analyst-chick-fil-may-beat-mcdonalds-us-sales/

[grumbler]

It isn't at all clear that this was a representative sample, or even a random sample.  I strongly suspect from the wording of the report that this was a self-selecting sample (i.e. the 29 franchisees that were willing to spend their time being interviewed).  29 of 3500 gives a confidence interval of 18 with a confidence level of 95%, if they were randomly chosen.  That's not very solid surveying.

[11B4V]

Nooo!

http://www.businessinsider.com/mcdonalds-franchisees-say-the-brand-is-in-a-deep-depression-2015-10

McDonald's franchisees say the brand is in a 'deep depression' and 'facing its final days

    Hayley Peterson

    Oct. 16, 2015, 12:02 PM

McDonald's franchisees believe the brand is in a "deep depression" and could be facing its "final days," according to a new survey.

"We are in the throes of a deep depression, and nothing is changing," one franchisee wrote in response to the survey by Nomura analyst Mark Kalinowski. "Probably 30% of operators are insolvent."

Another wrote, "The CEO is sowing the seeds of our demise. We are a quick-serve fast-food restaurant, not a fast casual like Five Guys or Chipotle. The system may be facing its final days."

More than a dozen franchisees expressed frustration with McDonald's management, saying that CEO Steve Easterbrook's turnaround plan — which includes initiatives like all-day breakfast and a shift to digital ordering kiosks — is a distraction from the core issues of McDonald's, like food quality and customer service.

"The lack of consistent leadership from Oak Brook is frightening, we continue to jump from one failed initiative to another," one franchisee wrote.

A second wrote, "I have been in this business since the early 1970s but have not seen us this leaderless in all my time."

The company's reaction to their frustration, one franchisee claimed, is for operators to "get out of the system" and quit the business.

Several franchisees complained about all-day breakfast, saying that it has complicated kitchen operations and goes against Easterbrook's repeated promises to simplify the menu.

"The system is very lost at the moment," one franchisee wrote. "Our menu boards are still bloated, and we are still trying to be too many things to too many people. ... Things are broken from the franchisee perspective."

Franchisees also criticized the "Create Your Taste" program, which allows people to customize their burgers with premium ingredients.

"They are throwing everything they can against the wall to see what will stick," one franchisee wrote.

Kalinowski interviewed 29 US franchisees covering about 226 restaurants for the survey. McDonald's has more than 14,000 restaurants in the US. We reached out to McDonald's for comment and will update if we hear back.

McDonald's is trying to revive business following seven straight quarters of same-store sales declines in the US.

In addition to adding all-day breakfast and "Create Your Taste," McDonald's has also made some changes to its core menu items.

The company started toasting its hamburger buns longer, making its beef patties slightly larger, and changing how the patties are seared.

McDonald's has also announced plans to remove antibiotics from its chicken.

There are at least a few franchisees who are on board with the changes.

Among the myriad of negative responses to Kalinowski's survey, two franchisees expressed hopeful attitudes.

"I think our leadership is headed in the right direction," one wrote. "It will take time."

Another said, "The CEO seems to be doing OK so far!"

Good. Their stuff is bad for you anyway.

[Monoriu]

I think there is an easy solution for McDonald's problems.

This photograph was taken at a McDonald's in Taiwan.  She is a model who works part-time as a McDonald's manager.  Ever since these photographs had surfaced, business at that branch has remarkably improved.  She is now nicknamed the goddess of McDonald's in this part of the world.

[grumbler]

I think there is an easy solution for McDonald's problems.

This photograph was taken at a McDonald's in Taiwan.  She is a model who works part-time as a McDonald's manager.  Ever since these photographs had surfaced, business at that branch has remarkably improved.  She is now nicknamed the goddess of McDonald's in this part of the world.

So, inflatable plastic managers like this one in every McD's?  That wouldn't be creepy at all.  No, sirree.

[Tonitrus]

I tried to find a picture on Google where she looks more like a real human being, and less like an artificial doll.

I failed.

[Admiral Yi]

But you can't even see her elbows. 

Dorsey:  Of course the analyst could be skewing the sample to validate his own point.  Journalists do it all the time when they cherry pick some like-minded people to represent the mood on the street.

However, for someone doing so, 29 is a pretty big sample, and only 12 out of 29 is a pretty weak result.  Furthermore, it's not clear to me that an analyst who is seeking to validate his own negative outlook on Mickey's is necessarily going to provide potentially useful feedback to the CEO.  Lastly, the share price is going to be driven by metrics, not a perception that franchisees are pissed off at management.

[Monoriu]

I tried to find a picture on Google where she looks more like a real human being, and less like an artificial doll.

I failed.

Her Chinese name is 徐薇涵.  Try to use that name to search for more results.

Her not wearing a McDonald's uniform.  She is a model afterall. 

[DGuller]

It isn't at all clear that this was a representative sample, or even a random sample.  I strongly suspect from the wording of the report that this was a self-selecting sample (i.e. the 29 franchisees that were willing to spend their time being interviewed).  29 of 3500 gives a confidence interval of 18 with a confidence level of 95%, if they were randomly chosen.  That's not very solid surveying.

Can't say anything about how representative it is.  If the sample is not representative, then everything else is moot.

If it is representative, then what do you want him to do?  Survey 1082 franchises?  And if 30% of franchises really think the company is crashing, is that really much better than 50%?  I'm also not sure how that 3500 number matters all that much, but that's neither here nor there.

[11B4V]

She looks like a cartoon.