McDonald’s is a fast food empire with over 40,000 restaurants across the globe and more than 13,000 locations in the United States. With an annual revenue of over $23 billion a year, the company is by far the largest burger chain in the world.
Since the pandemic, it saw profits ballooning, despite citing rising operational costs and supply chain issues as major problems dragging growth and even passing along a series of price increases to its customers to allegedly offset sales losses. With its stock rallying at the moment, and higher menu prices resulting in a significant increase in average ticket costs, it’s hard to imagine how a business of this size and magnitude can be struggling right now.
The answer is not simple, but in today’s video, we’re going to explain why the biggest fast food chain in the entire industry is facing a rare and yet unsurprising wave of bankruptcies in 2023.
Despite being the greatest fast-food corporation the world has ever seen, 95% of McDonald’s restaurants in America are operated by independent owners, and the war between corporate and franchisees seems to be getting worse this year. For decades, operators have been fighting McDonald’s tightening rules and expensive demands, and now many of them are hitting a breaking point.
For about 40% of franchisees, McDonald’s new financial requirements may end their years-long leases because the company’s rising expenses are not allowing these stores to hit profit targets. Simply put, these franchisees may have their contracts canceled, losing all of their investment if they fail to meet corporate expectations. In other words, one in four McDonald’s operators is at risk of going bankrupt due to the actions of the company itself.
But their strategy of expanding their business on the back of operators isn’t a clever one. At some point, its entire model could be at risk if enough of them decide to leave the company. When they signed their contracts with the megachain, franchisees were promised to become partners with the company. But over the years, corporate changed rules and regulations, so that the operators were the only ones responsible for the risk of managing a low-margin restaurant business during economic downturns.
On a consumer level, things aren’t going great either. The brand’s push for more expensive burgers has not been well-accepted by customers. Even though the average ticket prices have risen by roughly 15% over the past 12 months due to higher menu prices, there are fewer people visiting McDonald’s locations on a monthly basis, and they are even fewer people revisiting its restaurants multiple times in a month.
Put simply, customer loyalty is going down, and that was one of the main pillars that helped McDonald’s to build its brand since its foundation in 1955. Unfortunately, McDonald’s case is a clear demonstration of how a great business can rot from within due to its own greed. That’s a reality more people are waking up to right now, and that ultimately will contribute to the demise of the greatest fast-food chain America has ever seen.
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Article and video cross-posted from Epic Economist.
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I love MickyDs but now a meal burger fries in $8 bucks. I can go to a lot of places for that or get healthy premade salad or meal from decent grocery store. On top of that it is not fast anymore takes for ever. Feel sorry for people who invested millions took risk then slave to corporate, defeats purpose owning a business. Take those millions buy some residential rental properties and will make more money and full control no employees and 1/100 headaches
Did Biden-omics kill the McRib?
Maybe their business model should change to one where real, unadulterated food is served.
This is nothing more than the corporate’s Harvard MBAs getting bigger bonuses without knowing where their bonus money comes from. Haven’t been in a Micky D’s in years after convincing me they cannot make a cup of coffee that isn’t rancid or bitter or putting an old hamburger on a roll in the microwave and serving it. .
I recently paid $11.40 for a quarter pounder meal. A double cheeseburger meal at Culvers is $2.00 less. It’s no wonder they’re going bankrupt.
People used to go to the Golden Arches because it was cheap… then because it was reasonable… then with Bernie Sanders’ 15 dollar minimum wage, two adult meals and two happy meals costs over 40 bucks as predicted. Of course franchises are going to fold, their product is 2 out of 10 stars. McDonalds is doomed… Bidenomics.
This is what happens when wall street instead of main street runs the show. Plus I refuse to eat at fast food anymore because there have seen one too many postings online of workers at fast food that molest the food or refuse to wash their hands after they use the bathroom and that makes me wanna hurl because of it. No thank you I’ll pack my own.
The new restaurants are cold and uninviting, local bars are comfortable. Prices are nearly as high as local bar burgers that are better. After the plandemic, I began supporting local businesses as much as possible. Inflation has spiked and my wages have not. McDonald’s lost my business due to those 4 reasons.
Too expensive for me now. Sad, but true.
Remember the 5 dollar foot long from 2021? It’s 9 dollars plus tax now. Subway is doomed too. Thanks Bernie and AOC. Those unemployed employees are going on the taxpayer provided dole… Bidenomics.
I haven’t eaten at McDonalds in at least 5 years because of a combination of poor quality and high prices. I don’t intend to go back.
Last time I was in McDonald’s was in the early 90’s.
Not all, but a lot of the employees are ignorant. Not stupid, just have no people skills, a lot don’t appear to WANT to work, that customers are interrupting them from playing grab a** with the each other.
Other than places like Chic FIL-A & a few others, I don’t bother with fast food places. It’s cheaper to eat at home, thanks to Brandon
Their business model, of keeping burger prices low via grinding up human trafficking victims and mixing it in with whatever else their patties consist of, was severely disrupted by Trump and they are starting to feel the pinch. Good riddance.
Cuckoo… cuckoo
The ridiculous 15 dollar minimum wage brought us 13 dollar big mac meals, and doomed Burger King, McDonalds and other cheap fast food restaurants. Democrat donkeys screw up everything they touch.
Best things on the menu are the original hamburger/cheeseburger. I’d like to see them focus on that and even offer six-packs like some of their competitors.
Also–bring back the beef tallow and salt for french fries.
THEY HAVE TOO MANY PRODUCTS AND TOO MANY PEOPLE WORKING1
Streamline the offerings, get rid of the fancy coffee. Offer about 5 different burgers and fries. 1 Chicken sandwich and nuggets. Start marketing to families and kids again instead of millenials wanting coffee! Break with Disney and go back to coole Happy Meals. The Happy Meals used to bring them in.