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NO matter how much we buy into the dream of obtaining Elle Macpherson’s body by mainlining green juice, there’s something about McDonald’s that we just can’t resist.
This is food with virtually no nutritional value, packed with E numbers and ingredients you have to try not to think about — but something keeps drawing us back to its comfortingly babyish, sweet and salty embrace.
But finally, I’ve had the wake-up call I needed to put me off Macca’s for good.
Despite McDonald’s extensive efforts to improve U.S. sales over the last several years, its most promising endeavor is coming up short — and as a result, so are the company’s domestic profits.
Reuters reports that according to McDonald’s fourth quarter report, released Monday, “Sales at established U.S. restaurants fell for the first time in six quarters as the novelty of all-day breakfast failed to overcome competition from supermarkets and other food sellers.”
As the market closes at another all time high, the “recovery”, if only on paper, is again bypassing most Americans and it is starting to hit where it hurts the most. According to restaurant tracker NPD Group, traffic at U.S. fast-food restaurant fell 1% in the third quarter, the sector’s first traffic decline in five years. Unfortunately, the reason is not that many Americans have migrated to a higher wealth group and are now eating at more expensive venues, but a more familiar one, namely higher costs of eating out, changing consumer behavior and higher bills for items such as rent and drugs. In other words, America’s “main street” is so squeezed, it can’t even afford to eat out as much as it did just one year ago.
Even as the world’s biggest fast food chain moves its headquarters to a $250 million 608,000-square-foot complex in Chicago’s West Side in the spring of 2018, McDonald’s intends to close about 500 weaker-performing, company-operated locations worldwide in 2016 to bolster profits.McDonald’s spokeswoman Becca Hary confirmed the announcement, released just days after it withdrew its branches from Middle Eastern and three Latin American countries, in an email to The Street:
“It’s important to note that while we will have a net reduction in restaurants [in the US], the impact is minimal in comparison to the 14,000 restaurants we operate across the US. We consistently review our restaurant portfolio and make strategic decisions to better position our business for the future.”
While this should come as no surprise to any rational non-establishment-teet-suckling economist (and certainly not to our readers), former McDonalds’ CEO Ed Rensi continued his crusade against the naive “solution” to poor living standards that has been peddled by a clueless administration in the form of a higher federal minimum wage, and after he patiently explained one month ago that “the $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business just do the math” Rensi found that nobody has still done the math.
Which is perhaps why the ex-CEO reappeared on Fox Business yesterday to explain to Maria Bartiromo that as fast-food workers across the country vie for $15 per hour wages, many business owners have already begun to take humans out of the picture, McDonalds most certainly included.
As Rensi admitted, “I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry – it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries – it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”
While this should be no surprise to any rational non-establishment-teet-suckling economist, former McDonalds’ CEO Ed Rensi exclaims, in a recent Forbes Op-Ed, that “a $15 minimum wage won’t spell the end of [fast-food brands]. However it will mean wiping out thousands of entry-level opportunities for people without many other options.” The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business (and we add simple supply and demand fundamentals) – just “do the math” Rensi rants…
When it comes to jobs growth in the US, all one can say is thank god for waiters and bartenders: after all, a Starbucks barista is precisely what a recently fired oil chemical engineer making half a million dollars really wants to do with their life.
However, the days of easy job gains for the BLS may be coming to an end (even if on a seasonally adjusted, goalseeked basis the trend has a long way to go).
Anchorage, AK — An alarming photograph of a McDonald’s chicken McNuggets Happy Meal left to sit unrefrigerated and untouched for six years recently went viral on social media.
“It’s been 6 years since I bought this ‘Happy Meal’ at McDonald’s,” Jennifer Lovdahl posted on Facebook. “It’s been sitting in our office this whole time and has not rotted, molded, or decomposed at all!!! It smells only of cardboard.”
Tokyo, Japan — Fast food giant McDonald’s has been having a rough time. Considering its recent decision to close 700 locations in 2015, dire predictions from franchise owners claiming the company is facing its “final days,” and a June announcement that the company was shrinking for the first time in its long history, it’s safe to say McD’s is looking for something — anything — to turn its struggling business around.
The advertising geniuses at McDonald’s may have found that interesting, albeit disturbing something. McDonald’s unveiled its new McChoco Potato yesterday, a spin on the classic fries, which will be drizzled with chocolate and white chocolate syrup. The company says “The combination creates a wonderful salty and sweet harmonious taste.” McChoco fries will be rolled out in Japan starting January 26th, and if they are a hit, it’s possible they will eventually be sold in the United States.
Having told the world that it will borrow billions (and cut capex) to “return all free cash to investors,” it appears ratings agency S&P just needed to remind McDonalds that Shareholder-friendly releveraging no longer comes for free…
*S&P LWRS MCDONALD’S RTG TO ‘BBB+’ ON SHR BUYBACK PLANS
Who could have seen that coming?