McDonalds US franchisees unhappy over giveaways
- June 19, 2008
The economic downturn in America has led to a number of initiatives from McDonald’s seeking to lure customers, but the strategies now seem to be frustrating some franchisees.
US comparable sales for the company rose 4.3% in May as their promotions, which included providing a small menu of items at $1 and the use of giveaways, provided steady growth. Giveaways have so far included a two-day burrito giveaway and free coffee on Mondays in some areas.
Franchisees dealing with rising costs, however, are reportedly beginning to tire of the promotional plans of the company. A panel of McDonald’s owners that sets national advertising policy for all 14,000 U.S. restaurants has now indicated their disapproval of plans to giveaway chicken sandwiches in August but are yet make a final decision on whether they will reject the proposal.
The tension appears to be mounting as some franchisees witness sales rise but profits flat-line. “The challenges are unprecedented, and I’ve been in business for 40 years,” Mr. Biddle, an owner of five franchises in Oklahoma, told Crain’s Chicago Business. “We just have to be sure we are doing the best we can with the money we have to spend.”
The economic conditions faced by the company are clearly concerning both franchisees and the company, but their beliefs in methods to counter the concern appear to be polar opposites.
The methods adopted by McDonald’s appear to show a long-term focus, as they seek to entice more customers in the face of economic hardship in the hope that great benefits will be reaped when economic conditions improve. With rising operating expenses, though, franchisees are understandably worried that the short term pain may not be worth it.
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