McDonald’s (MDNDF) seems to be having a good year, but things look a bit different from the inside.
A survey asked 30 McDonald’s franchisees what they think is working well for the fast food chain, and what they think should change, Business Insider reports. The franchise owners operate a combined total of 271 locations out of the over 14,000 outposts in the U.S. Though it wasn’t a consensus, there were a few things in particular that stood out.
A number of franchisees complained that McDonald’s offers customers too many discounts, marking prices down on most of its menu items. One said that the chain needs to “focus on profitable sales, not just customer counts.” As prices go down, so does a franchisee’s return on investments. So, in order to remain profitable, one would have to operate numerous restaurants.
Discounting so many items also doesn’t mix well with high labor costs, which was the franchisees’ second complaint. In fact, they said that as labor costs continue to increase, which appears to be the case, McDonald’s won’t be able to offer discounts anymore. Additionally, higher labor costs means that operations are less profitable, effectively pushing out smaller operators who can’t afford to pay their employees.
Lastly, the menu is too complicated. As one franchisee described it, “the kitchen is impossible, and our service is challenged more than ever.” With so many options to choose from on the menu, service is slowing down—which contradicts the reason why many people go to fast food restaurants in the first place.
While all-day breakfast appears to have been a great sales driver for McDonald’s, some franchisees aren’t so optimistic that they can maintain that momentum. After launching it nationally last year, the chain saw same-store sales increase by 5.7% in the fourth quarter. Franchisees say that sales growth has slowed to 0.2% in the third quarter of this year, and it’s expected to go decrease another 0.8% in the fourth quarter. A similar survey conducted last year also uncovered pessimism surrounding the roll out of all-day breakfast.
However, not all operators are dealing with these difficulties. One franchisee wrote in the survey, “My part of the country is on a roll.”
McDonald’s could not immediately be reached for comment.
