Source: McDonald's: Behind The Arches, John F. Love (July 1, 1995)
Edit: changed ie to eg, thanks for the correction all
I don't think you are really taking a position, just acknowledging McD has power to enforce Franchise Agreements more than others Franchisors because separately they tend to also be landlord. on first reading though I thought your comment was suggesting more nefarious behavior because the dual relationship landlord/franchisor.
Just in case anyone else read your comment that way, I would just say as a lawyer I would feel pretty confident taking a case on behalf of a Franchisee who paid significant franchise fees to McD and was otherwise in full compliance with the Franchise Agreement, but my client's Franchise Agreement was de facto cancelled (and presumably Franchise fees kept by McD) because McD terminated the lease without cause.
Certainly if the Franchisee gave McD cause under either a Franchise or separate lease Agreement (failure to pay rent; using non McD suppliers; etc...) that is a different story, but legally McD couldn't just engage in the collection of Franchise fees only to evict tenants in a scam like fashion. again I don't think you were suggesting it, that was just my initial interpretation.
McD's are masters at standardising 'generally acceptable in a pinch' food.
Why have Burger King in particular had this problem?
What impresses me least about McDonald's is their ruthless child-targeted advertising.
EDIT: in sort of a quaint way the incentive structure is reminiscent of the manorial system.
https://www.goodreads.com/author_blog_posts/2484147-lessons-...
from Ed Weissman (who's #6 in overall karma on HN)
Right, because it's nothing like that now.
It's probably bad to guess Ed's personality from just one article, but most of what he says is said by the bullies in software dev who push their own tasks to "Done" on the cost of the whole team, to then say how much more efficient they are since they have closed more tasks than anybody else.
Also the goal is not to beat Mozart, but to provide regular, recurring quality background music for tv show episodes every day, if you want to earn your bread and butter with it, and not just win a price. That's done best by a cooperating team, not by a rockstar. So if he was part of the "top 5 of 60" employees it may have been an improvement to overall results if there were just the other 55 employees. The general success of today's McD is that they are open nearly 24/7 and that they are nearly everywhere you go. I bet McD makes more money now than back in his "glorious" days.
You have to be a special kind of asshole to throw away meat and food instead of just saying the food is cold.
https://www.opc.gouv.qc.ca/fileadmin/media/documents/consomm...
I don't have any of the kid-centric television channels, so from the radio and television spots that I've experienced, I would have to say that McDonald's advertising appears to be heavily marketed towards the black community.
For instance, this one has been on heavy rotation in the past few months: https://www.youtube.com/watch?v=ASqC809WaHs
The problem is they can not do this at all. Children are extremely easy to manipulate, and that is pretty much what advertising is.
The parents need to spend a lot of time to counteract those evil forces and you cannot teach a kid to not like the amazing toy he/she is watching on TV. You can teach them that they can receive presents on specific date though.
> Research has shown that young children—younger than 8 years—are cognitively and psychologically defenseless against advertising. They do not understand the notion of intent to sell and frequently accept advertising claims at face value. In fact, in the late 1970s, the Federal Trade Commission (FTC) held hearings, reviewed the existing research, and came to the conclusion that it was unfair and deceptive to advertise to children younger than 6 years. What kept the FTC from banning such ads was that it was thought to be impractical to implement such a ban.
On the other hand, I do teach my kids about advertising. They are quite skeptical about it.
About 10 or 15 years ago, there was a McDonalds ad that had parents dressing up. The kids exclaimed "The black suit! You know what that means!" "McDonalds for breakfast!" Cut to the kids smiling and happy while eating at McDonalds.
Positive associations are simple to create, particularly in those unaware of what you are doing.
http://www.imdb.com/title/tt4276820/
for an entertaining and educational dramatization of the McDonald's story, including the franchising and real estate leasing aspects.
The same goes for any restaurant, it's why they ply you for drinks.
It's also where the now much-mocked "super sizing" comes from. They can up the revenue per meal while upping the cost by almost nothing.
I don't think it was like that in the beginning. Running a cinema (movie theater) was a normal business until Hollywood milked it to the extreme. They created their own chains of multiplexes in many countries to push their idea of how the business should work.
These days modern cinemas are built like tourist traps with customers having to either walk through/past chain restaurants or having to find some weird side door to enter directly. It's quite a difference to even the 80s or 90s when cinemas had impressive/glamorous lobbies.
While yes, what you describe is true - part of this has to do with the film rights pricing which is mandated by the studios/distributors, so even if a theater wanted to structure things differently, they could not..
Of course many of the major theatre chains are also related to the studios, so it gets a bit hard to see which end is up..
but I digress
Of course they go for like $1.50 so no matter how it breaks down, it's a nice ROI.
In addition to being a very well-done movie, it does a superb job of describing the relationship between the visionary founders of a startup, and the sales guys and bean counters who turn it into a successful business. It doesn't matter that the McDonald brothers were revolutionizing burgers, the telling of this part of the story captures perfectly the same sort of activity that goes on at any startup with a new idea, (emphasis on new). It also captures very well how the suits recognize a good thing when they see it, buy into the vision (but for very different reasons from the founders), and finally take over and render the founders obsolete.
Really great movie for anyone involved with startups.
Kroc was just as visionary, if also greedy and manipulative and ready to succeed at all costs. He's clearly not afraid to steal a business or wife. He's also somehow easy to relate to (thanks Keaton).
You can see him lying to himself and justifying his actions. Got the feeling that Kroc wasn't all that different from many SV founders. You don't go to SV to make a burger stand, you go there to make an empire. There's a reason Kroc is discussed in business schools.
On a side note, reading about the founding of Twitter there's a lot this kind of back and forth.
When people talk about McDonald's "selling burgers", what they mean is McDonald's and its franchisees.
That is not true of the franchisees. That's a pretty big difference.
I don't think it is trying to mislead (or doing it by being sloppy), it's examining how McDonald's is structured (both the branded operations overall and the corporation).
A good startup movie, by the way.
Traits of a good founder.
Plus one on it being a good startup movie.
So I think it's a bit misleading and hyperbole to say 'how they really make money'. The only reason the can make that money is because of the product and the customer base that patronizes the McDonalds. So in the end it is because of the product. "How they really make their money" is because of that product.
Breweries (and "PubCo's") typically own the premises, which is leased to a tenant (publican) who is required to purchase the brewery's products.
In franchise you have to stick to the branding and menu offers and in practice you have to follow the prices (legally they can't force independent franchise companies to sell a burger for the same price, but there are ways) giving very little freedom.
- percent franchised vs owned https://www.fool.com/investing/general/2016/04/03/what-perce...
- quote from article that is misleading"Of that $18.2 billion generated by company-operated stores in 2014, the corporation keeps just $2.9 billion. Of the $9.2 billion coming from franchisees, the corporation keeps $7.6 billion."
Well, if one thinks of how many of these burger joints..
And yes the burgers also make some good money ;)
It's almost like saying that grocery stores are not really in the grocery business, they are in the business of accepting cash and credit card payments. True, that's where they "make their money", but that business would dry up pretty quick if they didn't stock groceries.
As an aside, back when oil was >$100/barrel Exxon/Mobile had numerous boarded up properties around Phoenix with For Sale/Lease signs that were neither for sale or lease, as the losses/write downs were valued to dilute the windfall profits they were raking in at that time(my source was an agent for CBRE).
Also, real estate investments don't actually have a direct impact on profits when reporting on accrual basis (as all larger companies are required to). Those costs can only be deducted over time (something like 10 years for buildings).
If all you need is a basic drink, they get it more or less right for several hundreds of a percent lower.
Also the new self service kiosks make ordering a bit less grim http://burgerlad.com/2015/02/mcdonalds-touch-screen-ordering...
But it was of necessity. It was very difficult to get a good cup of coffee from other UK fast food outlets. Has coffee caught on in the UK? At the time, coffee seemed to be mostly an after dinner drink.
The takeaway: Don't dismiss a useful service that you can't directly monetize. It's possible that you can gain high-quality information which can be monetized indirectly. It's all about getting better information about a particular market than everyone else.
Yes, but often much of this can happen largely as a consequence of your doing something else, and you may not realize it.
convince a market that it is good information
Which is just basic Marketing.
and then prevent your competitors and your clients from simply replicating your process
Which is also a common issue with startups in general. Good word of mouth can keep you ahead of competitors, and you can make it cheaper for clients to just pay you than it would be to do it themselves. All basic things.
Nobody goes there anymore. It's too crowded.
I know it's a serious worry, but seems like one of those good problems to have.
The problem is that if those customers continue on their downward trajectory, it's going to hit McDonalds too ...
I found that rather depressing. All those people struggling to improve their business are merely struggling to increase the income of the property owner. (I guess if I had the money and inspiration to become a property owner it would be less depressing).
I think a lot of why real estate works for them is that the business is not affected by recessions - they may even sell more burgers if people can't afford fancy places. So they can buy real estate cheap when others can't.
Also - when people choose to eat less burgers, or there is less innovation in the menu, the stock price dips.
https://www.bostonglobe.com/magazine/2014/09/17/the-secret-w...
I've been to multiple understaffed McDonald's and man does the quality suck. When they have staff things are decent but now I can predict when a McDonald's will be bad.
Franchisees = OEMs
Franchisees not doing their best = laptop filled with crapware
Hacker News story placement can be confusing at times. I would understand if they have some tech centric metric somehow, but this isn't even tech?
> On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
Personally, anything that is counterintuitive or surprising gratifies my intellectual curiosity. "You thought that X was important for this business, but you've been bamboozled this whole time! It's actually Y!"
The discussion has introduced a couple of great documentaries as well as anecdotes from people who have worked in similar circumstances in retail, (i.e. the business is important, but the valuable real estate that they're sitting on is even more important) so I don't have a problem with this sort of submission.
