Industry News | May 12, 2017 | By Danny Klein | QSR Exclusive Brief

McDonald's Opening the Checkbook for Franchisees

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McDonald’s “Experience of the Future” design comes with a price tag that might as well be science fiction for some franchisees. In an article written by The Wall Street Journal, a commitment letter from the chain to U.S. operators revealed that the new additions could run anywhere between $150,000—$700,000 per location.

McDonald’s has said it hopes to update most of its free-standing U.S. locations by 2020, and roughly 2,5000 units by the end of this year. The design includes kiosk ordering, dessert counters, and table service via locater technology, and is adept to the brand’s recent and upcoming digital pushes. At first glance, though, this sounds somewhat familiar to McDonald’s “Create Your Taste” initiative that reportedly needed a $120,000—$160,000 investment from franchisees and resulted in some backlash. It has since been scrapped.

To speed up the “Experience of the Future,” rollout, and perhaps to avoid a similar fate, McDonald’s is offering to front 55 percent of the costs of the remodel. This is unlike anything the brand has done before given that franchises are typically required to pay for upgrades.

The Wall Street Journal reported that in the past, however, McDonald’s has paid up to 40 percent of franchisees’ remodeling costs. This has included only smaller changes in equipment and décor, though, not a full-blown remodel.

This offer does come with a bit of a caveat. In a letter sent to U.S. franchisees, McDonald’s said it will only fund operators willing to approve the company’s national advertising campaign built around the $1, $2, and $3 value menus.

McDonald’s isn’t strapped for cash these days. The company is riding a first-quarter earnings release that crushed Wall Street expectations and showed positive return on CEO Steve Easterbook’s forward-thinking initiatives, such as All Day Breakfast and the expanded Big Mac lineup.

Sales grew 1.7 percent at U.S. stores open for more than 13 months and global comparable sales increased 4 percent.