Bloomberg Businessweek - USA (2019-09-30)

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Bloomberg Businessweek September 30, 2019

of“McJob,”a slangtermused

sinceatleast 1986 thatdenoted

“anunstimulating,low-paidjob.”

Inthefallof2014,McDonald’s

went publicwith “Experience

of the Future,” an initiative

Easterbrook had been shep-

herding.It reimaginedthestore

entirely,fromhoworderswere

placed to what services were

offered.Intheupgradedrestau-

rants,dinerscanusetouchscreen

kioskstocustomizetheir burg-

ersintomillionsofpermutations,

suchasaddingextrasauceand

bacontoa BigMac.Thethinking

wasthatgivingcustomersmore

sayovertheirorderswouldresult

inthempayingmorefortailored

items.Somefranchiseeshaveben-

efitedsomuchthattheirrestau-

rants’salesarenowgrowingata

double-digitrate.Butothershave

bandedtogetherinopenrebellionandforcedthecompanyto

slowtheprogram’sfullrollouttwoyearspastitsoriginaltar-

get.Theyobjecttotheenormouscostsoftheproject,which,

forownersofseverallocations,canrunintotensofmillions

ofdollars,evenwithMcDonald’sofferingtosubsidize55%of

thecapitalfortheremodels.

Froma businessperspective,theenhancementsareachiev-

ingwhattheysetouttodo—annualprofitshaveinchedhigher

sinceEasterbrook’sappointment,andMcDonald’spostedits

fastestglobalsalesgaininsevenyearslastquarter.Initiatives

suchasall-daybreakfast,whichincludesthestapleMcMuffin,

andnewproductslikedoughnutsticksarealsocreditedwith

bringingcustomersbackevenastheexpandedmenuhampers

theclassicMcDonaldbrothers’efficiency.

Thecompanyhasalsointroduceda curbsidepickupsys-

tem.AnorderplacedthroughtheMcDonald’sappautomati-

callyappearsonthestore’sorderlistwhenthediner’sphone

is within 300 feetoftheproperty.Thefoodis preparedand

deliveredtothecurbbyflooremployees.Theworkersand

franchiseeswho’velongcomplainedaboutlowhourlywages

andpoorworkingconditionsincampaignssuchasFightfor$15

have generally taken a dim view of Easterbrook’s overhaul.

Westley Williams, a Floridian in his early 40s, says the initia-

tives and the chaos caused by mobile app orders, new items,

and self-order kiosks riddled him with so much anxiety that he

defected to nearby burger chain Checkers. “It’s more stressful

now,” said Williams, who added that he didn’t get a raise for

doing more work. “When we mess up a little bit because we’re

getting used to something new, we get yelled at.”

Concerns about staff welfare have become a major issue

for McDonald’s in the U.S., where the median pay for food

and beverage service workers is $10.45 an hour. Accusations

ofcoercionsoaredthisyearafter

workersfileda totalof 25 claims

and lawsuits alleging endemic sex-

ual harassment. The complaints

have since become a national con-

versation and part of the political

fabric: In June a group of eight

senators led by Democrat Tammy

Duckworth of Illinois and includ-

ing 2020 Democratic presiden-

tial candidates Bernie Sanders

of Vermont, Elizabeth Warren of

Massachusetts, Kamala Harris of

California, and Amy Klobuchar

of Minnesota sent a letter to

Easterbrook decrying “unsafe

andintolerable”conditionsand

“unacceptable” behavior in the

chain’srestaurants.

CarlosMateosJr.,whosefamily

owns 21 stores near Washington,

D.C., says Easterbrook’s modern-

ization has succeeded in attracting

new customers to his restaurants, but revamping everything

simultaneously was a burden. About a quarter of his franchises

still need to be remodeled. “There’s training that’s involved.

We have to get the employees ready for it—mobile order and

pay and Uber Eats and kiosks. All these different things are

happening at the same time, and it really took a toll on us.”

Adding an Uber Eats counter for delivery, touchscreen

kiosks, modern furniture, and power outlets to charge mobile

phones means franchisees incur additional costs from $160,000

to$750,000 perrestaurant,McDonald’s hassaid.Blake

Casper,a Tampa-basedfranchiseewhooperatesmorethan

60 McDonald’sandfoundedtheNationalOwnersAssociation

lastfalltoresistEasterbrook’sameliorationplan,wouldtheo-

reticallyhavetoforkoveratleast$5million to make the CEO’s

dream a reality.

“I would like to make the kitchen as stress-free as it possi-

bly can be,” says Eli Asfaw, who operates seven franchises in

the Denver area. For a start, scaling back rollouts mandated by

thecompany,suchasall-daybreakfast,would“makeit easier

forustokeeppeopleandmakeourpeoplehappy.”Asfawalso

saystheremodelingplanhasheapedpressureonowners, from

financial headwinds to the tight window in which the company

wantstheupgradestobecompleted.

Theresistancefroma factionoffranchiseestoEasterbrook’s

mandatedremodels—insomecasesdrastic enough to require a

restaurant to be razed and rebuilt—reached a breaking point in

January. The National Owners Association wrote in a letter to

its 400 members then (it now counts more than 1,200) that the

changes should be halted amid concerns about eroding prof-

its and the costs of implementing Experience of the Future.

“To put it bluntly,” the letter read, “stop everything that is not

currently in the works.”

A shield at Chicago

headquarters

features one fry for

each continent