What is in this article?:
- Survey: McDonaldâ€™s franchisees' sales outlook dim
- What franchisees had to say
Many of the franchisees surveyed for the quarterly study also said that they were also concerned about harsh winter weather.
McDonald’s owner-operators surveyed for the most recent Janney Capital Markets’ McDonald’s Franchisee Survey have given the most pessimistic outlook for the quick-service chain’s domestic sales in the history of the quarterly study.
Many of the 30 franchisees surveyed warned on harsh winter weather and expressed frustration with initiatives like the Dollar Menu & More and the High Density Kitchen.
“At some point, [McDonald’s Corp.] is going to have to wrap their heads around the fact that we cannot be all things to all consumers,” one franchisee told Janney anonymously. “In fact, I’m not sure what McDonald’s is supposed to be anymore. … We must simplify our operations if we expect to retain our credibility in terms of convenience and thus value.”
The survey, meant to help forecast the chain’s fourth-quarter performance, asked franchisees to rate their outlook for the next six months of business on a scale of 1 to 5. Respondents produced an average score of 1.89, between “poor” and “fair” — the lowest score Janney has ever recorded and well below the 2.9 average rating over the entire history of the survey.
On the same 1-to-5 scale, the operators rated their relationship with the franchisor as 1.70, which came in below the average score between 2.1 and 2.2 over the life of the McDonald’s Franchisee Survey, which has been published before the brand’s quarterly earnings report 60 times since 2003.
Janney analyst Mark Kalinowski, the author of the study, lowered the investment firm’s projections for McDonald’s domestic same-store sales to a 0.3-percent decline for December 2013 and a 2.2-percent decrease for January, “based on weak sales trends and declining prospects for a meaningful turn for the better any time soon.”
The new forecasts were adjusted down from Janney’s prior estimates for McDonald’s same-store sales in December and January. Those targets were 1 percent higher for December’s original target and 4.2 percent higher for January’s original target.
Kalinowski disclosed that in the prior 60 times the McDonald’s Franchisee Survey has been published, the sample of operators surveyed has produced a same-store sales figure within 1 percent of the company’s actual result 40 times and within 2 percent of the company’s result 55 times.
However, the 30 operators Janney surveyed represent a small portion of McDonald’s roster of about 2,500 domestic franchisees, and the 212 locations they own account for a small portion of McDonald’s more than 14,000 restaurants in the United States.
The Oak Brook, Ill.-based brand does not comment on the results of Janney’s McDonald’s Franchisee Survey because the report is released during a “quiet period” before the company releases its earnings results.