McDonald’s franchise owners are voicing concern and frustration over a new rating system the fast-food giant plans to roll out early next year, with some saying it’s the wrong time due to unprecedented pressures on the force. labor.
The company plans to roll out the system, called Operations PACE, which stands for Customer Performance and Excellence, in January 2023. McDonald’s notes that its “business climate is changing” in a 60-page overview of the PACE system, which was seen by CNBC. , and says that it needs a “new approach that supports the achievement of the objectives of our growth plan”.
However, some franchisees worry that the new process will hurt operations and alienate workers in a tight job market. The program requires six to 10 visits a year by company and outside evaluators per location, in addition to other inspections for things like local food safety standards. McDonald’s has some 13,000 franchised locations in the United States.
Other owners fear it will result in a less collaborative approach to operations, with more stringent ratings, according to three people with knowledge of the matter and two separate surveys of franchisees. These people declined to be named because they are not authorized to speak publicly about PACE.
“It just kills morale, and with today’s hiring environment being so tough, I can’t afford to lose more people,” said a franchisee with decades of experience and about a dozen locations. This person has 500 employees, but is short 100 despite paying $16 per hour.
The owner also said McDonald’s previous rating systems were more collaborative and featured mutually agreed-upon goals. “You can’t make things better by telling my managers they failed,” the person said.
McDonald’s defended the new evaluation plan.
“We must remain focused on upholding our world-renowned standards of excellence in our restaurants. This comprehensive performance management system, designed with ongoing input from franchisees, will offer personalized support and training to restaurants to help them deliver a seamless McDonald’s experience.” keep customers coming back,” the company said. “To give restaurants time to learn the new system, optional learning tours will be offered in 2022 before the official start in January 2023.”
The company added that the assessment framework includes personalized resources that will help franchisees improve daily performance and drive sales, profitability and guest numbers.
Companies continue to face pressure to attract and retain workers. Labor costs have also risen at McDonald’s and other fast food companies, causing franchisees to raise prices along with wages, and competition for workers is fierce. There is also growing union pressure at different restaurants and retail stores across the country, with starbucks workers leading the charge in the food sector as workers advocate and seek to organize for better benefits and conditions.
Tensions with franchisees are nothing new in the company, where business in the US has been strong, even in the face of continuing labor problems and record costs. In the past, CEO Chris Kempczinski has said the company’s diverse set of owners reflects society and different points of view. The owners and McDonald’s last publicly clashed over tech fees McDonald’s said the owners owed it thanks to uncollected dues, and separately, on pandemic support.
The National Owners Association, an independent franchisee advocacy group for McDonald’s owners, recently shared an internal survey about PACE with its members, which was seen by CNBC. The survey showed that 71% had been trained in PACE so far, and only 3% of responding restaurant operators said that the planned qualification curriculum is an accurate reflection of operations. More than half considered that it was not accurate or somewhat inaccurate. The survey was sent to 900 owners and received up to 500 responses.
Nearly a quarter felt it would help or help operations a little. In addition, 64% said that the staff environment has gotten worse or worse, which speaks to the frustrations owners have with this new system that is currently being implemented. More than 80 percent said it would not serve the company’s “people first” goals. A separate letter from the NOA Board to its members said leaders were working with the company on recommendations to reduce pressure from the program.
“Who in their right mind would add so much pressure to a widely known struggling industry? [and its] employees, facing the worst labor shortage in history, inflation and price increases, fear of pandemic tremors and much more while instituting a program as labor intensive as PACE?” said a source in franchisee leadership. with knowledge of the situation.
A recent survey by the retail firm Kalinowski Equity Research of more than 20 owners operating more than 200 restaurants also expressed some disapproval of PACE. It includes comments from operators that underscore what some feel is the ill-advised timing of the launch.
“PACE audits will prevent us from increasing sales and increase employee turnover. Worst time in system history to implement such a program,” said one respondent. “Stop PACE programs, they will decimate the staff we need to operate,” said another. Overall, the proprietary survey ranks franchisees’ relationships with businesses at 1.19 on a scale of 1 to 5, the third-worst score in its history, dating back to mid-2003.
Another franchisee, who has decades of experience and more than a dozen locations, said employees are still reeling from the pandemic and system time is “deaf.” The owner has more than 500 employees.
PACE will have “strangers with little to no restaurant experience come in and rate and interact with my staff,” this person said. “The problem for me is not classification, the problem for me is that my workforce is fragile.”