McDonald's franchisees are more optimistic than they've been in years, as analysts predict 20% of independent restaurants will close across America
McDonald'sfranchisees' optimism about the future of the business is higher than it has been in years, according to Kalinowski Equity Research's quarterly survey.
- McDonald's Travis Scott and J Balvin meals, as well as the success of spicy chicken nuggets, drove sales at McDonald's during the pandemic.
- The fast-food giant has also profited from sit-down restaurants' struggles, as many independent restaurants shutter for good.
- McDonald's declined to comment for this story.
McDonald's franchisees have never been happier, despite the coronavirus pandemic sending the restaurant industry into a tailspin.
Kalinowski Equity Research's quarterly survey of McDonald's franchisees found the owner-operators — who control 95% of the locations in the US — are more optimistic than they have been in years. In fact, their average business outlook is just slightly below the 17-year survey's all-time high, way back in February 2004."Things are going really well for the burger segment as a whole," CEO Mark Kalinowski told Business Insider on Monday. "We think September was one of the very best months of the last 10 years, and McDonald's and Wendy's seem to be two of the key drivers of that."
- "Pent up demand."
- "Momentum is growing, and I think once other restaurants experience cooler weather which will shut down their outdoor dining areas, consumers will use drive-thru at an increased rate."
- "Celebrity platters, dining in competitors are closed, menu price increases."
McDonald's is thriving as the restaurant industry struggles — especially independents
Some franchisees hinted that independent restaurants' struggles are paying off for McDonald's."People are getting tired of cabin fever and eating at home. Many mom and pop restaurants are still closed (or gone), driving traffic to us," wrote one franchisee. UBS analyst Dennis Geiger wrote in a recent note that roughly 20% of independent restaurants are expected to close, citing discussions with private foodservice distributors. That represents the closure of roughly 70,000 independent restaurants across the US.
Even when they're open, customers are more likely than ever to pick McDonald's and other chains over mom-and-pops. Drive-thrus, as well as tech investments, put fast-food chains like McDonald's at an advantage over the average sit-down restaurant, especially one without online ordering or delivery partnerships.
"People don't want to cook at home every day, in every meal — go figure — and you know, their favorite full service restaurant might not offer exactly what they want these days," Kalinowski said."They're willing to make a little bit of a trade off," Kalinowski added. "Drive-thru, these days, feels safer than eating an indoor in a full service restaurant for a lot of people."
McDonald's declined to comment for this story.
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