McDonald’s Discounts Have Franchisees Frustrated

by Nate Wooley | April 19, 2013 11:29 am

McDonald’s Discounts Have Franchisees Frustrated

McDonalds185 McDonald's Discounts Have Franchisees Frustrated[1]The new discount menu rolled out by McDonald’s (NYSE:MCD[2]) leaves some owners concerned over profitability.

The new menu — with an emphasis on value and lower prices — has franchisees worried about their long-term success, Nation’s Restaurant News reports[3].

With the lower prices and aggressive discounts being advertised heavily by the chain, restaurant owners are concerned about not being able to sell more profitable full-priced items. In a survey conducted by analyst Mark Kalinowski, owners said the level of discounting rated 8.32 on a 1 to 10 scale. The new menu pricing has also led to dissatisfaction among the owners as they grade their relationship with the chain at a 1.93 on a 1 to 5 scale with 5 being the best.

McDonald’s has not commented on the report, as the company is anticipating its upcoming earnings report. A spokesman did say that the report surveyed only 25 U.S. franchisees out of a possible 2,500.

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Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2012/09/McDonalds185.jpg
  2. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  3. Nation’s Restaurant News reports: http://nrn.com/latest-headlines/discounting-breeds-discord-mcdonalds-franchisees
  4. Cracker Barrel to Add New Category to Menu: http://investorplace.com/2013/03/cracker-barrel-to-add-new-category-to-menu/
  5. Study: Restaurants Can Boost Sales by Offering This: http://investorplace.com/2013/02/study-restaurants-can-boost-sales-by-offering-this/
  6. Restaurant Rewards Well-Behaved Kids: http://investorplace.com/2013/02/restaurant-rewards-well-behaved-kids/

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