re: What keeps McDonalds afloat?

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Ya know, I like their fries as much as anybody but they are overrated, unless fresh out of the fryer.

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Well, if they still used lard to fry them, they'd be fricking spectacular.

This is what happens when you cave to vegetarians and vegans.

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and do a remarkable job of finding great real estate.

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Yes, they do their homework. They have bought land and opened up in areas that are in the process of being developed. There is a lot of value in becoming the first to establish. It's a little more "high risk high reward", but the risk is minimized because of their "homework" done on the areas.

Some chains, like Wendy's, plays it more safe by following Walmarts, etc.

Unlike Pizza Hut the food you bought in 1984 is the same as the food you buy today at McDonald's.

Prices are ridiculous for what you get and it's not really fast food anymore.

I definitely would not eat a free McD burger. Gross shite and a waste of a meal.

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Dollar menu items are cheap and cheap to make.

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They don’t make any money on the dollar items, except for maybe the fountain drink.

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I’m a business person. I understand that. I also know about their real estate holdings, which wouldn’t be possible without the sales. My question, which I guess I should’ve worded differently, is how do they keep driving sales? Especially with so much competition now.

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fat people love mcdonalds. And we have a lot of fat people. It really plays in the obese and poor demographic.

Not the shake machine, that’s for sure

maybe it's the fries?

My thoughts as someone who worked for corporate McDs and then on the advertising agency side for 15 years until recently switching fields.

The main competitive advantages McDonald's has over most of the competitors are taste of fries, taste of breakfast items, a place kids enjoy and real estate.

Fries and Breakfast are winners based on consumer studies in which McDonald's performs poorly in many categories.

Being the favorite among kids is a huge driving force in family decisions.

Real estate is big due to number of sites and the location of the sites. McDonald's real estate department is second to none. McDs corporate makes money on real estate (rent and service fees based on a percent of sales) while franchisees make money on the food. I was told for a long time that Wendy's RE department was a couple of people who would just buy the closest site available to an existing McDs. Probably some exaggeration but not much. McDs will literally tear down and move a restaurant across the street as traffic patterns change over time at a cost of high 6 figures and will be profitable. That's how close they study the area.

Price/Value was a big advantage during Dollar Menu. Not sure where they stand now that Dollar Menu is gone...at least the $1 McDouble. But they are still one of the overall cheaper options combined with some huge advantages I mentioned. And contrary to what someone said, Dollar Menu was very profitable at the item level for each product plus all the extra business it brought in. Sales almost doubled during the Dollar Menu run starting in 2002 going from $1.5M to approaching close to $3M today (probably about $200K short from what I remember).

Do they have disadvantages? Definitely. Public perception of quality is poor on most of the menu. This is why you see the new QPs and the expanded drink lineup over the last several years.

Service is not great. The reason is simple. To have 15K locations generating almost $3M apiece, you have to have a wide appeal. For McDs that means a whole lot of different products leading to a hard job. Everybody mostly pays the same, so what are you going to do if you're a good employee? Work at Chick Fil A where they have a much simpler menu and workflow or McDs where you bust your arse. So McDs, BK, Taco Bell and the like get the worst employees. Unless they pay more and take a huge profit hit that won't change.

I could go on about positives and negatives. But the short answer is they do have some very powerful advantages (some of which do involve food quality perceptions) to go along with some real challenges. I will say I don't like the direction they are going. Corporate is trying to move franchisees to almost double their store counts, going from 7 on average to 12-15. That leads to less involved owners in your neighborhood location which will hurt things like service and cleanliness even more.

They shift to what their customers want...

Like coffee

And Salads