McDonald’s Corporation (NYSE:MCD) is currently in the most strained relationship with its American franchisee in a decade according to Janney Capital Market. The Survey by Janney found that the company was rated poorly by restaurant owners both in ties and business outlook.
According to Mark Kalinowski, a Janney analyst, franchisee respondents rate the relationship between franchisees and the company as the lowest in eleven plus years of survey history. Many respondents reported that the current situation is the worst they had ever seen.
The new CEO of McDonald, Steve Easterbrook will have his handful with the currently strained relationship between franchisees and the corporation. Mr. Easterbrook took the reins in March after it slumped the most in over a decade. The relationship between McDonalds and its franchisees is important as the franchisees run 90% of the almost 14,000 McDonalds restaurant.
On the basis of the survey, Janney has lowered its sales projection for March. It now predicts a decline in U.S. same-store sales of 3.7% that is a higher decline than the earlier forecast of 3% as per consensus estimate. The average outlook by franchisees for the next six months is averaged at 1.81 which is between poor and fair.
One of the franchisees wrote that the company talked about menu reduction and simplification of the menu but keeps on adding products to increase its own sales but in vain.
The dismal outlook has come in a time when McDonalds is suffering stiff competition from chains like Chick-fil-A and Chipotle Mexican Grill. Respondents were especially scathing on the chain’s new ‘Create Your Taste’ platform. The franchisees complained that the new initiatives by McD are pricey for franchise operators to implement.
McDonald’s Corporation (NYSE:MCD) in response said that the company has about 3100 franchisees all across America and that they value the feedback from the franchisees. The company also highlighted that the survey covered less than 1% of the franchisees.
