McDonald's Is In Deep, Deep Trouble As Biggest Fast Food Chains In America Face Collapse
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Published 2023-05-26
The report notes that management is struggling to justify higher fees and other charges to franchisees that are already coping with rising wages and the unrelenting climb in costs for ingredients and packaging which have been eroding profits over the past few years. Franchisees operate 95 percent of McDonald’s locations in the U.S. and generate about 70 percent of revenue in the country. The National Owners Association estimates that McDonald’s restaurants, on average, will generate less cash for a second straight year in 2023, further complicating the situation of operators that aren’t financially sound.
Squeezed by higher costs and grumbling at new operating rules, franchisees are joining a meeting this month with the company’s board to press their case in person. The session will give U.S. operators “an opportunity to share with the board of directors why we believe we are on a destructive path,” one group of owners said in an emailed newsletter to about 1,000 members. Backed by analysts, many of them fear the franchise system is nearing a major crisis, some going so far as to suggest the business model is doomed. “The CEO is sowing the seeds of our demise. We are a quick-serve fast-food restaurant, not a fast casual like Five Guys or Chipotle,” said one franchisee. “The system is very lost at the moment,” said another franchisee. “Our menu boards are still bloated, and we are still trying to be too many things to too many people. Things are broken from the franchisee perspective.”
In a financial survey by the Nomura Group, a franchisee stated that the company is in the “throes of a deep depression, and nothing is changing” and exposed that roughly “30 percent of operators are now insolvent”. Another franchisee cited by the FCC report went as far as to speculate that McDonald’s is literally “facing its final days”. In recent months, Americans have taken to social media to voice their outrage about the McDonald’s prices. They say the chain has become wildly overpriced while quality is deteriorating. For U.S. consumers, some of the biggest draws of eating at fast-food chains are convenience and comfort, but the biggest of them all is certainly affordability. And while McDonald's customers reckon with higher fast-food bills, the company itself is also in the midst of a reckoning about its future. The bankruptcies, the closings, and the layoffs demonstrate why analysts believe McDonald’s business model is collapsing.
All Comments (21)
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Mcdonalds collapse is the least of our worries.
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Americans are now speaking with their wallets. These insane prices for value meals are completely unacceptable.
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Not only is McDonald's getting more expensive here in Australia the meals are getting smaller as well.
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The problem in my opinion is what I call the "Sears CEO Problem". Put someone in charge of a company who doesn't use their product, isn't part of the demographic who would use the product, and is too busy looking like a CEO , but is all shine, no substance.
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Hadn't been to McD's in years, but hubby and I stopped at one last week. A Big Mac meal and a fish sandwich (tiny little square of petrified fried fish) meal was a few cents shy of $20. THAT's why they're going under. Nasty overpriced junk. Never again.
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Frankly the food doesn't taste all that good anymore. That is why I no longer patronize McDonald's.
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Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, diesel fuel and heating oil shortages, baby formula shortages, available automobile shortages and prices, the price of living place.I feel the McDonald's execs would rather raise prices and blame wage increases when really they just refuse to reduce their own pay checks.The food is not the same and the prices are insane! If I’m going to pay that much, I will either eat at home or go to a nice restaurant!!!For years they had the $1 soda/teas. I don't eat McDonalds but my family does like it. So about once a week while going shopping I would grab myself an ice tea and food for my family. Now the price of unsweetened iced tea is $3 so I completely stopped going. I make my own tea for a few cents a gallon. So a family of 4 will pay $12 in soda/tea, plus the food. Nope, not this mom!I don't know if they are in a destructive path, but when you have to pay minimally $9 for their cheapest combo meal, that is beyond not good.I've been praying for McDonalds to go out of business for 10 years.4 main reasons I stopped. 1) Covid shutdown. Since all locations shut down for months, I got out of the habit completely. 2) Interior shutdown. This is pt2. Even after reopening they kept the insides shut down for a year or more. Before Covid I met with my folks at a McDonald's 1-2x a week just to chat with a cheap meal. Now I do it elsewhere. Because of this, they lost another substantial portion of their customers. 3) No longer family friendly. All McDonald's are aiming for adults with their themes, coloring, and removal of play areas. You hardly ever see families in there anymore. This applies for my family as well. 4) COST$!!!! This is ultimately the biggest point. Their prices USE to be 1/3 that (or less) if a sit down restaurant for the same basic amount, now prices are on par. If I'm paying this much, I'll go to a better place or fix it myself.Fast food forgot what they were. They were a p!ace where teenagers worked to make really cheap food for people in a hurry. Now people are demanding middle class wages which has sky rocketed prices as the quality of the food goes down. I never eat at McD's because the food sucks and the workers look like they escaped from a mental hospital or a prison.If you're used to drive-thru, take a peek inside the store: Employees eating while working the counter, trash everywhere, nasty bathrooms... Just say no.McDonald’s used to be a bright fun happy place where kids had birthday parties surrounded by cartoon characters. Now, the buildings in my town are square, brown, and gray. Inside hard tables and tile with blaring TV news! How awful 🤮oversaturation we don't need 5 McDonalds in a mile radius.Mcdonalds raised their prices and eliminated some of the foods on their menu. I feel for the employers who work at mcdonalds. a breakfast burito has double in price. but not the size.I have not eaten McDonald’s in six years. And I haven’t missed it at all!!This makes me want to go out and create my own fast casual place that has all the magic McDonald's used to have 30-40 years ago!!
