McDonald's earnings dive 30 percent. Can Monopoly salvage the slide?
Janney Montgomery Scott analyst Mark Kalinowski has lowered his projection of McDonald鈥檚 Corp.鈥檚 September same-store sales to -3.6% from -2.5% based on a survey of 32 domestic franchisees鈥� opinions. The company reported a 30% earnings drop in Q3 on Oct. 21; the consensus forecast for September was -2.7%.
The Janney survey also finds that McDonald鈥檚 operators are heavily relying on the current Monopoly promotion to stop the ongoing sales slide.聽 鈥淓verything depends on Monopoly,鈥� one franchisee told Kalinowski.
鈥淗opefully Monopoly will give us a few more transactions,鈥� said another. 鈥淪ales are trending down but Monopoly will help sales since it [did] in the summer of 2013 even if it will not help profits,鈥� another operator said. 鈥淚 am counting on Monopoly to stop the bleeding,鈥� said another.
One franchisee said, 鈥�McRib should prevent further declines.鈥� But the company has said that this fall鈥檚 McRib promotion will be a local option, not a national effort, which could reduce marketing support.
So what鈥檚 gone wrong? Franchisees pin blame for McDonald鈥檚 sales slide on a number of factors. 鈥淲e just have nothing new to offer our customers,鈥� was one explanation. Another cites 鈥渢otal loss of momentum.鈥� Corporate management is a frequent target for these operators. 鈥淲e are leaderless,鈥� says one franchisee. 鈥淢cDonald鈥檚 Corp. is scrambling to find answers to their problem,鈥� says another.
Asked if the chain has followed through on its stated intentions to streamline the menu and simplify kitchen operations, most of the operators interviewed echo the one who told Kalinowski, 鈥淣othing but lip service; not a serious initiative.鈥� Says another: 鈥淭hey simplify鈥nd then just add more products. I don鈥檛 think that anyone at McDonald鈥檚 really has a strong vision for the brand in the USA.鈥�
鈥淕oing in the other direction with all the talk about customization,鈥� says one franchisee, while another complains that streamlining 鈥渨ill take much more than eliminating crinkled pickles, and a couple of things like that. We have heard over and over about the menu being simplified with no action. Maybe this time they will follow through with their promise. They are finally admitting that the vast menu has killed our service times. It also makes it next to impossible for our crew in the kitchen, not to mention our people taking the orders in the drive-thru and on the front counter.鈥�
