McDonald's on Tuesday announced a $6 billion plan to overhaul most of its 14,000 U.S. restaurants, the fast-food giant's biggest renovation in decades.
The makeover will include new furniture and decor, remodeled counters that allow for table service and "refreshed" exterior designs. McDonald's also is planning to install digital kiosks for ordering, customizing and paying for meals, as well as easier-to-read digital menu boards in restaurants and drive-through lanes. In addition, restaurants will designate parking spots for customers who order food through the company's mobile app.
Restaurant industry consultant Richard Adams notes that McDonald's franchise owners typically pick up 75 percent of the cost of refurbishments, with McDonald's picking up the rest of the tab. Franchisees operate as partly independent restaurants. McDonald's owns the real estate and buildings, as well as sets rules that owners must follow.
"A newer restaurant, say one built since 2010, will cost a few hundred thousand on the franchisee side," said Adams, head of the Franchise Equity Group, in an email. "An older location with the old-style roof will need a complete remodel and will cost the franchisee nearly a million dollars.
For those franchisees who can't afford the remodeling, the only recourse is to eventually sell their business to a larger franchisee who can afford to take on such debt," he added.
Under Chief Executive Steve Easterbrook, McDonald's financial performance has improved after years of stagnation, when the restaurant chain added poor-selling items to its menus, lost touch with younger consumers and let customer service suffer.
Sales soared after Easterbrook introduced all-day breakfast in 2015 and the company began aggressively promoting the quality of its food. McDonald's also is benefiting from its "McDelivery" service partnership with Uber at 5,000 locations.
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