Franchise Equity Bulletin |
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| By: Andrew Adama | ||||
We make every effort to keep these E-mails brief and quick to read so occasionally we error on the side of brevity. In our last issue we recommended that Owner/Operators: "Set menu prices to maximize profitability". This does not say "maximize prices" and yet Jack Greenberg is worried about Owner/Operators, "raising prices aggressively". So let's expand on this recommendation. How's this: "Set menu prices to maximize profitability by eliminating deep discount promotions in LSM, Co-Op, and OPNAD programs." With the elimination of discounting Owner/Operators would be free to set menu prices that make sense for both their customers and their P&Ls. Speaking as a customer the menu prices at McDonald's have reached levels that are approaching your "fast-casual" competitors. For instance the Joint Venture stores in San Diego are charging $4.99 for the Chicken Parmesan basic value meal. Prices like that will either drive customers to a competitor or steer them over to the discounted menu items. But no one apart from MCD management can blame Owner/Operators for going to the menu board when forced to deep discount so much of the menu. We continue to recommend a pricing balance which cannot be attained with panic driven discounting. But then it appears "Panic" was what Jack's E-mail was all about, a carefully drafted, 300 word personal threat to the Owner/Operator community A related Dow Jones article follows at the end of this bulletin. ************* Leadership? Every organization has its mission and its limitations. We wouldn't expect the National Leadership Council to argue for Owner/Operators in the pages of the Wall Street Journal or the Chicago Tribune. Nor would we expect The Consortium to advocate for issues that, while not insignificant, are not of interest to the public or the financial community. A good example is the order to replace the 2X2 square box netting on playgrounds with the "no climb" webbing. The original netting is a product that was designed and approved by MCD and manufactured by vendors supervised by MCD. And now the Owner/Operator has to pay for the safety upgrade? Only in McDonaldland. As usual this situation is set up to profit the vendor and relieve MCD of any responsibility. This is the type of problem that requires a strong NLC that actually confronts the tough issues (large and small) and makes management accountable. Until you get that type of "Leadership" you can thank the NLC as you write the check for your new netting. ************* Time flies when you're spending the vendor's money on bus trips: Mike Roberts has been President of MCD USA for ten months and was deemed ready to take a prominent role on the March 22 conference call with Wall Street analysts. O/Os should listen to the replay of this conference call. While you hear much corporate rhetoric this is different. Management talks about you, your stores, and your overwhelming support of management's plan for the system.. In Mike Roberts comments he stated: "Owner/Operators from across the country have told me they are reengaged and ignited and they are looking forward to improving their restaurants and to working with their consultants in a non-threatening and holistic environment to build their business and to build their cash flow. While we still have some skeptics the US agenda, our focus on the restaurants, and our process, have turned many of our Owner/Operators into believers." It's all about Mike Roberts teaching you that running good QSC is good business. And if you don't become a Mike Roberts "believer" the Chicago Tribune writes about the result: "But some U.S. franchisees have greeted the service initiatives and tougher assessment tools with skepticism, saying they are a way of forcing out weaker operators, a claim McDonald's has strongly denied. However, Roberts acknowledged Friday that franchisees who consistently fail to make the grade will be purged. "We think we've got a very objective process, which will, for the bulk of operators, create a compelling case for the need to improve," he told analysts and investors during a conference call. "Obviously, there will be some who do not respond ... and we will take appropriate actions to either encourage them to get on board or find another way to make a living." (Chicago Tribune 3/23/02) When asked about patterns in the mystery shops thus far Roberts said that the biggest shortfall was a weakness in speed of service. If this was a "learning" for Oak Brook then few in management have spent time in the restaurants over the past three years. By the way, "split-function" causes no increase in labor costs. |
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| Article Source: http://business2u.co.za | ||||
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