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There's a lot of broader context from operators that should be given attention too. McDonalds has been abusing operators with a mandatory expanding menu full o

There's a lot of broader context from operators that should be given attention too. McDonalds has been abusing operators with a mandatory expanding menu full of complex items that puts a lot of operating cost onto the franchisee (operator). And lately mandated tech upgrades to support mobile ordering, along with aesthetic upgrades that most customers hate. These menu items come with expensive equipment, supply and staffing commitments . Consumers see this in memes about the "soft serve machine being broken". The truth is the menu has exploded with hard to assemble items (e.g. mcwrap, sandwiches, salads) and flimsy equipment. And more recently mandated technology upgrades to support mobile & kiosk ordering to drive staff away from the counter and into the kitchen. Along with drab aesthetic upgrades that cost millions per location. You'll notice In n Out, a privately owned company, has bucked the trend and refuses to do mobile ordering or doordash for this reason. They've kept their real estate traditional. Their menu hasn't changed in 50+ years. As a result, margins are high, operations are efficient, staff are well comped and happy. Just keep in mind there's a lot to "inflation" driven by short term and risky business strategies that now have to be recouped by consumers.

swatcoder 3y ago
This is great comment. And it's worth observing that McDonald's is sort of structurally obliged to be doing all that. It's a trap that many very large companies find themselve stuck in and that in many cases becomes the poison that feeds their ruin. If McDonald's didn't "keep up with the Joneses" as their both their peers and upstart-darling competitors dressed up their menus and digitized their engagement, they'd be giving up their prestige as a defining brand in fast food and would set themselves down the road to being the next generation Arby's, A&W, Dairy Queen, etc -- nostalgic and lingering, perhaps, but no longer a global titan of their current scale. They may be playing out a losing strategy as you point out, but they also may not have had a winning strategy; at least not at the corporate level. And for corporate, this one has the advantage of extracting more short-term money from operators along the way, so it's not entirely a surpise that it's the one they'd run with.
- xcavier 3y ago
  Also... McDonalds isn't in the business of selling food. It is in the business of owning real estate and selling "inputs" to its franchise holders. It makes money by selling equipment and food inputs to franchisors. It can't grow revenues if it doesn't find new things to sell to franchisees.
  - tonymet 3y ago
    very true

swatcoder 3y ago

This is great comment. And it's worth observing that McDonald's is sort of structurally obliged to be doing all that. It's a trap that many very large companies find themselve stuck in and that in many cases becomes the poison that feeds their ruin. If McDonald's didn't "keep up with the Joneses" as their both their peers and upstart-darling competitors dressed up their menus and digitized their engagement, they'd be giving up their prestige as a defining brand in fast food and would set themselves down the road to being the next generation Arby's, A&W, Dairy Queen, etc -- nostalgic and lingering, perhaps, but no longer a global titan of their current scale. They may be playing out a losing strategy as you point out, but they also may not have had a winning strategy; at least not at the corporate level. And for corporate, this one has the advantage of extracting more short-term money from operators along the way, so it's not entirely a surpise that it's the one they'd run with.

xcavier 3y ago
Also... McDonalds isn't in the business of selling food. It is in the business of owning real estate and selling "inputs" to its franchise holders. It makes money by selling equipment and food inputs to franchisors. It can't grow revenues if it doesn't find new things to sell to franchisees.
- tonymet 3y ago
  very true