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Will McDonald's Turnaround Plan Include More for Employees?

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McDonald’s Corp. (NYSE: MCD) CEO Steve Easterbrook is scheduled to announce Monday morning the “initial steps” of his turnaround plan for the struggling fast-food giant, and a workers’ group wants to make sure that any plan includes them. The group said that it is leading a protest at the company’s annual shareholders’ meeting later this month to press the company to adopt a $15 an hour minimum wage and to “respect their freedom to join together in a union.”

The company has been the target of increasing protests and job actions, including strikes and protests in 236 U.S. cities and 40 countries in mid-April.

With workers demanding better pay and restive franchisees who are waiting for the company to offer a turnaround plan to boost sales and reinvigorate the brand, McDonald’s has some steep hills to climb. A recent survey by investment firm Janney Capital Markets indicated that the large majoring of franchisees now characterize their relationship with the company as “poor.” The workers’ relationship may be said to be at least as poor.

Janney’s survey included 32 franchisees who own and operate 215 U.S. restaurants out of a total of some 3,100 franchisees who own and operate about 13,000 locations. McDonald’s was quick to point out the small sample size.

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Franchisors are particularly unhappy with the sprawling menu and the recently announced pay hike to $10 an hour at company-owned stores. One respondent to the Janney survey said:

Now that (McDonald’s company stores) screamed out to the world that they were going up a dollar now and will go to paying $10 an hour beginning in 2016, we will be expected to do the same. Watch for $5 Big Macs, etc. and Extra Value Meals in the $8 to $10 range. See most of the Dollar Menu go away. The dollar drink any size will have to go. McDonald’s will have to change from the low-cost leader to something else.

With employees agitating for $15 an hour and franchisors balking at even $10, McDonald’s is stuck between the proverbial rock and hard place.

We will have coverage of the McDonald’s announcement when it is made.

 

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