McDonalds Can NO Longer Keep It Going… | The Economic Ninja
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Transcript
McDonald’s can no longer keep it going. It’s interesting. McDonald’s is an excellent barometer for the health or the sickness of an economy. Why? It’s the kind of restaurant that everyone can afford. Rich people. Poor people. I once sat down with a billionaire and we talked about McDonald’s coffee and how ingenious it was for them to start bringing in a really high-level, high-end type of coffee to try and take customers from Starbucks. Well, now we’re sitting in a moment where McDonald’s is in serious trouble. Not only have wages went up, cost of food has went up, and we are watching a massive conglomerate fail on a lot of different aspects.
One thing that blows me up is, or sort of blows me away, sorry, is the fact that certain governments around our country, let’s just point out California, forcing fast food employers to pay their employees $20 an hour. It only makes the problem worse. Well, now we’ve got two stories. Two things that are happening right now. McDonald’s is getting rid of self-serve drinks and some locations may charge for refills. Now, why are they doing this? Well, it’s because they’re trying to save money in every aspect that they can. Pretty much at this point, McDonald’s is the shell of the company it used to be.
It’s no longer the place where your children, in their early teens, would go get a job, their first job, learn the responsibility of showing up to work on time, having the responsibility of what to do with the money they earn. There’s no longer those employees. As a matter of fact, McDonald’s is made up of the very few employees that are left that aren’t robots that are serving your sodas and your coffee, all this crazy automation. They’re made up of people that are a lot older, quite frankly. I rarely see a young person in their early teens working anymore, but that used to be how it was.
There are a lot of very successful entrepreneurs in the world that actually say their first job was at McDonald’s. Well, McDonald’s cannot afford to employ a lot of people anymore. And so the reason why they’re getting rid of the self-serve, and this is going to be up to individual owners’ decisions, but it’s because they’re trying to cut costs everywhere. Which, ironically, the self-serve soda has the highest margins, I think, in their business. I could be wrong, but most restaurateurs tell me it’s the sodas for the massive profit, right? It’s like a cup of coffee. It costs you five cents and you charge $2.
So that’s one thing, but check this story out. This just came out of CNBC, and it’s entitled, McDonald’s franchisee group says the $5 value meal can’t last without company investment. Now, everyone’s been waiting for this $5 value menu to come out, and a lot of people aren’t happy with it. Why? Because there’s obviously a lot less food for the $5, because the cost of food and the cost of making that food is going up exponentially. It is the greatest sign post of how sick our economy is because of inflation. Our government and our central bank, which are two totally different entities, haven’t done enough to get on top of the inflation.
As a matter of fact, the sad thing is they love this, because slowly but surely most people will not blame them, even though it is 100% their fault. You will lose your job, and you will become more enslaved into a government system. Now, I can’t say all of you, because anyone that understands what NINJA Nation is about, or people that are getting ready for this are going to take advantage of it. But the government and central bank know, by and large, most people have no concept of how inflation works, and they don’t blame who’s actually to blame.
So it says here, an independent advocacy group of McDonald’s franchisees are weighing in on the company’s upcoming value meal promotion, cheering the affordability for the consumer. That’s not true. But pushing for future contributions from the company to make the discounted offering sustainable for operators in the long run. Well, let me explain something really clear to anybody that is owning a McDonald’s or a restaurant for that. There is no long run right now. We are in an actual crisis, an exponential crisis brought on by money printing and schemes by the government and the central bank. And you’re about to see a lot of shaking happening as we get into this presidential election, a lot of saber rattling.
And one thing people need to understand how many people type one if you’ve heard the stories of the 20 or $25 Big Mac meal, they’ve been making headlines quite frequently over the last six months, because that’s what it takes to turn a profit. And at first, you know, at first, you may think, all right, well, that’s just somebody trying to take advantage of someone. But what happens is the restaurants themselves are used to a certain margin, you know, the difference between the cost of food, the make it the wages, the all in costs, and then how much you charge your profit margin.
Well, when prices start to rise, companies simply just pass it on to the consumer until a point and it’s happening right now, where the CEO of McDonald’s came out and said, our demographics have changed. Poor and lower middle class people can no longer afford McDonald’s. So they are seeking food elsewhere. As a matter of fact, the whole landscape for the nation when it comes to eating out has changed. And McDonald’s is the absolute best barometer for food consumption and how much people are willing to spend for food nationwide. Why? Because it’s the largest, the most sold, right? Over one billion served.
And both wealthy people, poor people can afford it. Until just recently. Since McDonald’s inception, we have not seen a time like today. When people say all the time, well, this time is different. I go, oh, yeah, yeah, get ready. It is different. Because never has there been a time when the CEO of McDonald’s come out and said, poor people can’t afford food anymore. They’ve left. They understand this demographic. McDonald’s, if you think that they care about, you know, we all know that they care about the the integer cases of their business, like down to I’m going to have a computer take the order and I’m going to have the computer fill up.
It’s going to grab the cup of coffee, the right size. It’s going to put it under. It’s going to fill it to the proper amount, always the exact same, right? The patties are all the exact same size, the same way. Everything’s the same. They’ve got it down to a science. They also know who their customer is. So when the CEO of McDonald’s comes out and says, poor people can’t afford our food anymore, they know exactly how much you make when you walk in that door. Now, it says the facts remain. This is the story about McDonald’s that in order to provide the customer with more affordable options, they must be affordable for the owner or the operators of those stores.
McDonald’s vast resources and financial investments are essential to any sustainable, affordable strategy. This is the board of the National Owners Association wrote in a letter to membership. The letter calls the McDonald’s business model a penny profit business with 10 to 15% margin. So they’re running lower margins, higher volume. There is simply not enough profit to discount 30% for this model to be sustainable. It necessitates a financial contribution by McDonald’s. Now remember, when these owner operators are running their stores, they’re paying dues to this big conglomerate, right? The conglomerate that put them through Hamburger University taught them how to sell all that stuff.
When you’re in McDonald’s, you’re really in the game of real estate. That’s what most people fail to understand. That’s why they’ve eaten up or grabbed some of the most prime real estate all around the country, the best high trafficed corners across the US. Now CNBC reported last week that the $5 value meal would be hitting menu boards beginning June 25th. And please understand, this is a very important thing, regardless if you like McDonald’s food or not, all right? I gotta be honest with you. I’ve had my handful of sausage egg McMuffins. I like the food.
It’s totally not healthy for you. I get it. I’ve seen the documentaries. I get it, all right? Sorry. Type three, if you understand too, and you’ve eaten McDonald’s. The point being is this, all of Wall Street is watching this. They are watching with bated breath because this shows the health of the restaurant industry. When a company, the size of McDonald’s, a company that has went so far into the advancement using technology to do everything it possibly can, get rid of as many human beings as possible, is having a struggle, keeping its customers, they know there’s problems.
Now it says here, it says this $5 menu is going to be hitting the menu boards in June 25th and lasting roughly a month. It will include a McChicken or McDouble, four piece chicken McNuggets, fries and a drink. The combo would be substantially less than purchasing those items individually. The offering comes as lower income customers pull back from certain restaurants in the face of stubborn inflation. How do you like that? You know, in a world where Jerome Powell comes out and goes, I don’t see really an inflation problem. Then he goes, okay, a few months later, okay, there’s an inflation problem.
Then a few months later, okay, we’re going to do something about it. Then finally, it’s like, you know, I don’t see stag or inflation, but then we have it right now. This is, we have rising unemployment and rising growth. And it’s so crazy to me. Stubborn inflation, it’s stubborn. No, it’s not. The Federal Reserve didn’t have a sack, the cajon to actually raise rates where they should have been and they should have brought mortgages up to 10% overnight and stopped it. Just stop it. You get a plan on buying a house, we’re just going to stop it for a little bit.
They did it in 1994 on new construction where they added four points to all new construction loans and they stopped development like that. But they don’t want to be blamed for this one because this is the big crash. This is a hundred year cycle crash. This is us losing its reserve currency. Sorry, I’m getting off topic. But type five, if you understand what I’m talking about, it’s all one big cycle. So when I hear the term stubborn inflation, I just think there’s a moron right in the story. Let’s just call a spade a spade. CNBC reported that Coca-Cola had added marketing funds to make the deal more appealing for McDonald’s and its franchisees after an initial proposal did not pass international internal hurdles.
Think about that. Coca-Cola is having to throw in money. They’re asking McDonald’s throwing money. Coca-Cola is throwing money. You guys need to start giving us money so we can keep people coming in the door because we need to offer them something they can afford. If this isn’t the biggest shot across the bow over the economy, I don’t know what it is. And as much as the president loves eating soft serve ice cream as well, the world’s imploding around him, why don’t you bring him down to McDonald’s and say, hey, Joe, you’re going to have to buy your own ice cream.
He probably doesn’t even remember where he is. Hey, Taco Bell. And he’s going to figure out real quick, oh, man, the prices are going up. But that’s OK, Joe. You just keep slinging cocaine in the White House. McDonald’s declined to comment on the N.O.A. letter to its membership. In a statement to CNBC last week on the value meal, the company said, we know how much it means to our customers when McDonald’s offers meaningful value and communicates it through national advertising. It’s been true since our very beginning and never more important than it is today. The company had previously noted cash flows for U.S.
franchisees are up nearly 50 percent on average since 2018, even when accounting for inflation 2023 was one of the best years for franchisees cash flow in the company’s history. McDonald’s had previously said, wasn’t that interesting? McDonald’s Corporation saying one thing. The franchisees are saying something different. Like I told you earlier, it’s that margin that they’re used to. And they want to still be making that same margin, but they’re finding out at these higher price points, their margin is going to shrink. They’re seeing problems right now. And again, this second wave of inflation that’s starting to hit right now and you’re going to see it come out at the end of June because we all have two quarters of inflation data.
Layoffs are starting to pick back up again. Bad things are happening. And the franchisees are seeing it right now. McDonald’s quoted 2023 numbers. Guess what? You got a whole new wave of inflation that’s hitting at the second half of this year. And so you’re going to see that data come out for quarter two in about a month. All right. Now, the group also suggested taking the top two beverages from McDonald’s spinoff chain, Comix, Cosmix, and bringing them to the flagship locations, a way to excite customers and employees. But here’s the thing. And I’m going to close on this.
The only thing that’s going to get customers coming to that door is better food at a cheaper price. Type eight, if you think they’re going to be able to pull that off. Type nine, if you think they’re screwed. And this is one of the points that we want to make and watch because as you see things implode more and more and more, more people lose their jobs, then you know the end is nine and you are just getting ready and getting more money set aside and getting out of debt and getting ready to capitalize on this.
Because this will probably be the first time in recorded history that millions of people in America are going to know about something ahead of time. And it’s not going to be the banks sucking up everybody’s assets. It’s going to be other smart individuals like yourself. Type 10, if you’re one of those people that are getting ready for this, you’re not going to let a good crisis go to waste. As Hillary Clinton said, guess what, Hillary? The average Joe is now jumping in on this and we are going to absolutely crush it. Hope you guys got something from this.
The economic ninja, wait a minute, is out. [tr:trw].
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