McDonald's makes some changes in its franchisee inspections

The burger giant is making some modest changes in the controversial program following pushback from franchisees. It will temporarily cut Sunday inspections and give operators a break on equipment delayed by supply chain problems.
McDonald's inspections
McDonald's is making some changes in its inspections program amid pushback from franchisees. | Photo courtesy of McDonald's

McDonald’s is making some changes in an inspections program that ignited a year-long uprising among the chain’s U.S. franchisees.

The Chicago-based burger giant, in a memo to operators late last month, said that it would modify the program, known as PACE or Performance and Customer Excellence program.

The company said it would temporarily stop inspections on Sundays, for instance, and will not evaluate equipment issued by supply chain delays. McDonald’s is also planning to simplify processes to fix problems found in previous inspections—and will give operators a 48-hour notice via email before follow-up visits.

The changes are designed to “streamline processes, provide clarity, and ensure that organizations and restaurant teams can indeed run great restaurants,” Val Mathelier, VP, national operations and business services for McDonald’s USA, said in the memo.

David Bear, chairman of the National Owners Association, a group of independent operators that has been vocal in its opposition to the inspections, called the changes an “improvement” in a speech at the organization’s annual meeting last week.

But, he said, “They simply don’t go far enough. There’s more work to be done.” Specifically, he said the inspections are too frequent and said the “cycle” of assessments should be extended from every 12 months to every 18 to 24 months.

Still, the changes represent some movement toward a compromise over the inspections, which were implemented earlier this year and helped deepen tensions between McDonald’s and the owners who operate the chain’s 13,500 U.S. restaurants.

(Read more: McDonald’s is thriving right now. So why are franchisees so angry?)

McDonald’s has long argued that inspections improve operations at the restaurants, which improves sales over time because customers prefer speedier service and clean restaurants. The chain generated 10.3% same-store sales last quarter, one of the best performances in the period, and executives credit the PACE inspections for at least part of it.

“Field execution played a critical role as operations PACE advanced into its second quarter and we continued investing in the restaurant crew experience,” Joe Erlinger, president of McDonald’s USA, said in a message to the U.S. system. He cited improved customer satisfaction scores, decreased drive-thru times, a reduction in crew turnover and an increase in the number of employees.

The “quit” rate among workers hit an 18-month low, he said. In the memo, Mathelier said that food safety performance “is at an all-time high” while the company’s operations excellence assessment performance has improved 5.1% over last year.

Franchisees have long said they are not opposed to assessments. “We’re never opposed to grading,” Bear said. But operators have argued that the inspections are too frequent, particularly for larger organizations, which can take up considerable management time.

The operators also argue that the plan was implemented in collaboration with operators, notably through the company’s internal franchise group, the National Franchisee Leadership Alliance, or NFLA. “The abrupt changes to PACE, made without regard to the NFLA team’s suggestions and enhancements,” were not collaborative.

Another point of contention was a standard involving the percentage of customers who call an 800 number after a visit, take a survey and say they were either dissatisfied or highly dissatisfied with their visit. Operators have argued that they were initially assured when the 800 number was implemented years ago, that the information would not be used to punish franchisees.

McDonald’s has postponed the use of that standard. Bear said it should be eliminated. But, he said, “There probably should be a guest experience standard. But it should be developed and agreed upon with the franchise team at the NFLA.”

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