Out of all the changes proposed in McDonald’s Corp.’s vision for the “Experience of the Future,” what excites franchisees the most? Many say not a darn thing.
Instinet analysts published the results of their latest McDonald’s
Franchisee Survey in a Thursday note, including responses to the question, “What excites you the most about the ‘Experience of the Future’ restaurant?” The “experience” includes self-order kiosks, a menu revamp that emphasizes premium ingredients, and table service.
One answer that kept popping up was one word: “nothing.”
“Not interested, will drag my feet,” said one franchisee.
“Not much!” said another.
“Have paid no attention, not doing it,” said a third.
Not all of the franchisees were that bleak. Some said the kiosks and fresh beef were worth noting. Others see “potential” in mobile ordering.
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Others were even more optimistic.
“The overall plan is the best we have ever been offered from the partnering standpoint,” said another. “Should provide a springboard for a great future.”
McDonald’s was upgraded at Wells Fargo this week based on the company’s plan to roll out a mobile-order-and-pay platform, which analysts said is in keeping with the way customer preferences are moving. Other restaurant chains, like Panera Bread Co.
and Starbucks Corp.
, have seen business grow as new technologies are integrated into the customer experience.
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But franchisee responses to the Instinet survey indicate that McDonald’s business issues go beyond digital upgrades. Many commented on the level of discounting, which one called “excessive,” even as others said that $1 beverages were a positive. Some accused the people developing the technology and management of being out of touch with “McDonald’s or running real restaurants.” Concerns about cost also came up a number of times.
Then there are brand issues.
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“The new toys will not change perception that we are old and tired,” reads one response. “We have done nothing to make the kitchen faster. The amount of debt that will be required.”
And from another franchisee: “Beyond mobile ordering, the rest of it is delusional. Curbside service? Just because Applebee’s has it doesn’t mean it applies to us.”
Applebee’s is a DineEquity Inc.
casual restaurant chain.
Instinet analysts are bullish about McDonald’s future and the results of the survey, raising its first quarter U.S. same-store sales forecast to 0.8%. The FactSet consensus is for a 1.3% decline.
“We believe that a focus on value and beverages, as well as the Big Mac line extension promotion, served McDonald’s well during a challenging time for the restaurant industry in general during Q1,” the note said.
Instinet rates McDonald’s shares buy and raised the price target to $146 from $136.
Thirty-one domestic franchisees with about 243 stores participated in the survey.
McDonald’s shares are up 0.5% in Friday premarket trading, and up 9% for the year so far. The Dow Jones Industrial Average
is up 5.2% for 2017 to date.