November 2012 Archives

McDonald's (MCD) weak same store sales results for October announced Friday threatened to take down the entire restaurant space stock platform.

One of the problems is MCD reports by calendar month. But not every month has the same number of weekdays and weekends each year, and MCD missed a Saturday and a Sunday this year.

This could be fixed. Fiscal year formats of 13 periods of 28 days have been standard for 30 years plus in this space and could so be adopted. Every back office system in the world has such flexibility.

I suspect the problem is getting franchisee reporting lined up. It's a change and will cost something. But we expect such systems from the QSR industry pioneer. And less stress on the publicly traded company is good for all.

What was of greater concern were the MCD sales components: With some analysts projecting an embedded 3% price increase in the U.S., either customer traffic was almost 5% lower or product mix shifted lower.

McDonald's sales momentum deterioration in the U.S. and Europe was the most pronounced. APMEA (Asia Pacific/Middle East/Africa) was -2.4% vs. the rest of world, had poor Japanese trends and bouncing Australian results, and has been weak or negative for some time.

McDonald's does not disclose results by nation, but we can tell by the process of elimination that the MCD powerhouse markets of France and Germany had to be down big time as MCD reported the U.K. was up.

Finally, while the same store sales metric is commonly understood in the business press, comparing to one prior year is not really the best measurement. It misses cumulative history.

McDonald's was down versus 2011, but still up versus 2010, 2009, 2008, and all years back to 2003. In fact, versus 2002, U.S. MCD same store sales is up cumulatively 55.4% coming into FY-12. Wendy's and Burger King do not have the same advantage.

Additionally, reporting same store sales on a five year compound average growth basis could be more meaningful.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

A Dunkin’ Donuts that actually meshes with its urrounding neighborhood: Ben Walsh, deputy commissioner for business development in Syracuse, and Dominic Robinson, director of the Northside Urban Partnership, see the new restaurant as a model for citywide development

Sean Kist of the Post-Standard reports that there are many quiet reasons to be happy about a new Dunkin’ Donuts at North Salina and Division streets in Syracuse. The place is a reminder of why urban design matters, and it demonstrates what can happen when you bring together concerned merchants and a developer who listens.

Most important, it serves as a kind of memorial to Richard Wiese Jr., a relentless and tenacious neighborhood advocate.

“Oh, yeah,” said his widow, Betty Wiese, owner of the Lewis Uniform Co. on the North Side. “He always enjoyed a good fight.”

Rich Wiese, who at 63 died unexpectedly in January, was chairman of the Greater North Salina Street Business Association.

For years, the members looked with longing at the empty lot at North Salina and Division. They’ve always believed North Salina has a business district of unusual historical integrity, and with the right energy — and the right investment — it could be a vibrant hub.

So the association grew worried when it learned the Wolak Group — a Maine company that’s built about 80 Dunkin’ Donuts restaurants — intended to put one up on the corner. “We’d been hoping for a three-story building there, with underground parking,” Betty said. The immediate fear was that a traditional “big box” fast food joint would diminish the overall flavor of the street.

Yet the developer rejected a confrontational approach. Ben Walsh, deputy commissioner for business development in Syracuse, and Dominic Robinson, director of the Northside Urban Partnership, said the Wolak Group and its architect, Bob Abbott, offered a design that quickly addressed many concerns. The building, for instance, would be flush with the sidewalk — in the fashion of other old North Salina storefronts.

“We wanted it to have the look of a Dunkin’ Donuts, but we also wanted to fit into the area,” said Tom Santurri, Wolak’s vice president of operations and franchisees. Still, there were two sticking points when the idea went before the city Planning Commission. Neighbors called for residential units on the top floor, and they were concerned about a proposal to create a North Salina exit for a drive-thru window.

Read more at: Post-Standard