A fascinating piece on business realities for McDonalds franchise owners over at the Wall Street Journal. Did you know those McCafe things cost like $100,000 to own and install? And that individual franchisees have to pay for them out of pocket? Julie Jargon at the WSJ investigates:
As business evolves, the franchisees who operate about 90% of the company’s 14,000 U.S. stores bear the brunt of upgrade and expansion costs. With multiplying new demands in the kitchen, operations are more complex than ever, threatening slower service and mistakes in orders.
Several franchisees interviewed for this story declined to comment. Some worry that their investments will never pay off, according to an October franchisee survey by Janney Montgomery Scott analyst Mark Kalinowski. One franchisee polled said new McCafé coffee drinks are selling so poorly that, “we are not even paying for the electricity to run the machine.”
Once McDonald’s improved its drip coffee and saw sales react, it decided to branch out into specialty coffee drinks. Some franchisees balked, partly because of the price tag. The stations cost roughly $100,000 to install, with McDonald’s covering only about $30,000 of the total expense.
Make ours with extra S’mores syrup, and we’ll have an Arch Deluxe to go.