McDonald's Franchisees Push Back Over Costly 'Next' Overhaul

McDonald's Corp. is facing significant pushback from its U.S. franchisees over the "Next" business plan, a multiyear initiative designed to improve service, efficiency, and food quality. According to reporting from the Financial Post, the plan aims to transition the brand away from being merely a destination for quick, inexpensive meals.

The financial burden on operators is steep. Company estimates indicate the new upgrades will cost approximately US$800,000 per location. When combined with existing scheduled remodels costing at least US$400,000, some franchisees are facing a total expenditure of roughly US$1.2 million per restaurant. In response, McDonald's has committed approximately US$8.5 billion in rent relief and cash to help offset these costs, though the Financial Post notes the level of support varies by operator.

Chief Executive Chris Kempczinski introduced the strategy to combat intensifying competition and slowing U.S. sales, which were impacted by a value lineup that underperformed last quarter. The push comes at a precarious time for the company's valuation; the Financial Post reports that McDonald's shares dropped 32 percent between late February and the end of September, erasing nearly US$80 billion in market value. This trajectory puts the stock on track for its worst annual performance since 2002.

Franchisees, speaking through anonymous sources and an elected association for U.S. operators, have expressed surprise at the costs and a lack of project details. These concerns arrive as the industry faces broader pressures from rising equipment, labor, and beef costs—a squeeze highlighted by the recent bankruptcy filing of one of Wendy's Co.'s largest franchisees.