Updated: Jul 7
Now, this is very serious, folks. A new report by Franchise Consulting Group has exposed that the McDonald's business model is in its dying days.
Believe it or not, the biggest fast food chain in the entire world is facing rising unrest among franchisees that generate over two-third of its revenues in the US and say the company is on a destructive path.
One of them has gone bankrupt and filed for bankruptcy just 45 days ago. And insiders familiar with the matter are saying that systemic risks are rapidly growing for the food service retailer given that about 30% of franchisees are currently insolvent.
2,000 McDonald's restaurants may disappear from US cities by the end of 2023!
YAY! We at COMFORT KETO feel totally happy about this probability. Good riddance!!! Pressure from regulators, labor tensions and financial losses seems to force the fast food giant to sharply reduce its brick-and-mortar footprint this year as it faces a reckoning after years of mismanagement, according to the analysis.
A new report released by Franchise Consulting Group in partnership with VF Franchise Consulting titled McDonald's Model in Dying Days – 30% of Franchisees Insolvent reveals that some really big risks are facing the world's biggest fast food chain. Analysts say that for the first time in over 40 years, the ranks of McDonald's franchisees are dwindling and hundreds of them are on the verge of bankruptcy. The report notes that management is struggling to justify higher fees and other charges to franchisees that are already coping with rising wages and the unrelenting climb in costs for ingredients and packaging, which have been eroding profits over the past few years.
Franchisees operate 95% of McDonald's locations in the US and generate about 70% of revenue in the country. The National Owners Association estimates that McDonald's restaurants, on average, will generate less cash for a second straight year in 2023, and that will further complicate the situation of operators that aren't financially sound.
In an emailed statement, McDonald's acknowledged that inflation has trimmed the profitability for franchisees last year, but executives argued that the higher operating costs were necessary to keep the company aligned with its long-term expansion goals. GOOD LUCK WITH THAT!