McDonald’s to Franchisees: Merry Christmas. Now Open Your Stores

(by Maureen Morrison, AdAge.com) – …According to an internal memo obtained by Ad Age, McDonald’s is pushing franchisees to open on Christmas in a bid to lift December sales.

“Starting with Thanksgiving, ensure your restaurants are open throughout the holidays,” reads the Nov. 8 memo from McDonald’s USA Chief Operating Officer Jim Johannesen. “Our largest holiday opportunity as a system is Christmas Day. Last year, [company-operated] restaurants that opened on Christmas averaged $5,500 in sales.”

While that might not seem like much, consider this: In a second memo, dated Dec. 12, Mr. Johannesen pegged average sales for company-owned restaurants, which compose about 10% of its [restaurants], at “more than $6,000” this Thanksgiving. People close to the company said that about 6,000 more locations opened their doors this Thanksgiving than did last year. Presuming their sales were on par with company-owned stores, that’s about $36 million in additional sales.

Should the same amount of franchisees open on Christmas and the day’s take equal that of Thanksgiving, the bump jumps to a total of $72 million for the fourth quarter. If…every store in McDonald’s 14,000-strong U.S. system opens on Christmas, and rings up $6,000 each (a near impossibility), it could [bring in] a total of $84 million.

But if only a few thousand stores open, it’s still a win, since even a little [increase] can turn around ho-hum sales. According to people close to the company, franchisees opening on Thanksgiving accounted for almost one percentage point of the company’s 2.5% U.S. same-store sales growth in November.

“Our November results were driven, in part, by our Thanksgiving Day performance,” said Mr. Johannesen in the Dec. 12 memo. “Thanks to proper planning and your great execution, we capitalized on the opportunity to be open while our customers were on the road — and those customers rewarded us.” …

Opening on holidays didn’t happen much in the company’s Christmases past. Richard Adams, a consultant and former McDonald’s franchisee, said that “Thanksgiving was never open. Then 15 to 16 years ago, some started staying open.” As recently as five or six years ago, “you would never even talk about being open on Christmas, even if some were open on Thanksgiving. For the franchisees, this is a big cultural shift.”

But McDonald’s must pull out all the stops to eke out gains following its global October sales decline, its first in nine years. Hedgeye analyst Howard Penney said McDonald’s benefited in recent years from programs to keep stores open later and longer. But eventually, those opportunities became exhausted, which was one of several reasons for the sales deceleration.

“They kind of maxed that out — all the restaurants that made sense to have open longer, they’ve already got those sales dollars — and that whole initiative kind of dried up in 2012,” he said. “These kinds of things have a limited-growth opportunity year over year.”

So are employees paid more to work holidays? McDonald’s spokeswoman Heather Oldani said she can’t speak for franchisees, but “when our company-owned restaurants are open on the holidays, the staff voluntarily sign up to work. There is no regular overtime pay.” …

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