McDonald’s franchisees say all-day breakfast is a nightmare

Daily News Article   —   Posted on October 19, 2015

(by Hayley Peterson, Business Insider) – McDonald’s franchisees say the company’s all-day breakfast launch has been a nightmare.

The new menu is slowing down service, reducing average bills, and causing chaos in the kitchens, franchisees told Nomura analyst Mark Kalinowski in a new survey.

“In small stores, the problems are vast with people falling over each other and equipment jammed in everywhere,” one franchisee wrote in response to the survey.

Another wrote, “All-day breakfast is a non-starter. We are trading customers down from regular menu to lower-priced breakfast items. Not generating new traffic.”

A third called it “erratic, distorted, disorganized direction from McDonald’s,” while nearly a dozen more franchisees complained that it slowed down service and added complexity to the kitchens.

“Customers are abandoning us in droves because we are either too slow, or sub-par quality,” one franchisee wrote.

Others noted that the all-day breakfast menu is confusing to some customers because it varies regionally. In some states, McDonald’s is offering McMuffins on the all-day menu, while in others, only biscuit sandwiches are available.

A few complained that the launch requires extra labor, which is an added cost to franchisees who are already pressed for cash by declining sales and expensive kitchen upgrades.

“Unfortunately, with the current labor pool in our area, we are struggling to have enough people to run the shift, much less add an extra person,” 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. …

The all-day breakfast menu launched nationally on October 6, following regional tests. It’s still too early to tell whether it will be a success, but customers have been begging the chain for years to extend its breakfast hours. McDonald’s has said that “all-day breakfast is the number one request we hear from customers.”

The launch is part of McDonald’s efforts to revive business following seven straight quarters of same-store sales declines.

In an email to franchisees, McDonald’s US President Mike Andres called the all-day breakfast launch a success.

“The successful launch of All Day Breakfast proves that when we listen to and respond to our customers and align around a great execution plan, we will grow our business and take share,” Andres said, according to Bloomberg.

Reprinted here for educational purposes only. May not be reproduced on other websites without permission from Business Insider. 


Questions

1. What is a franchisee?

2. Why has McDonald’s required all franchisees to offer breakfast all day?

3. What are the main problems franchisees have with the new menu?

4. List at least 3 statements made by franchisees responding to a survey on the new menu.

5. a) How did McDonald’s US president describe the launch of All Day Breakfast?
b) What do you think of this in relation to the negative reaction from franchisees - should Corporate stay positive, or attempt to address franchisees’ concerns? Explain your answer.

6. Does this article affect your view of McDonald’s stores? Explain your answer.


Background

The quarterly survey is based on interviews with 29 franchisees that operate 226 units. That’s a tiny fraction of McDonald’s 3,000 operators and 14,000 locations.

It comes after a separate survey on consumer sentiment by YouGov BrandIndex showed consumers’ views of McDonald’s hitting a two-year high due largely to the addition of all-day breakfast.

McDonald’s Corporation says that “all-day breakfast is the number one request we hear from customers.”