McDonald’s affiliates fear the new classification system will alienate workers

McDonald’s franchise owners express concern and frustration over a new classification system the fast food giant is planning to roll out early next year, with some saying it’s poor timing due to unprecedented pressures in force. Work.

The company plans to implement the system, called Operations PACE, which stands for Performance and Customer Excellence, in January 2023. McDonald’s notes that its “business climate is changing” in a 60-page overview of the PACE system, which was displayed from CNBC, and says he needs a “new approach that supports achieving the goals of our growth plan.”

Some affiliates, however, are concerned that the new process will instead damage operations and alienate workers in a tight labor market. The program involves six to 10 visits per year by corporate and third-party assessors per site, overlaid with other inspections for things like local food safety regulations. McDonald’s has approximately 13,000 franchise locations in the United States.

Other owners fear it will result in a less collaborative approach to operations, with a tighter classification, according to three subject matter experts and two separate polls among affiliates. These people refused to be named because they are not allowed to speak publicly about PACE.

“It just kills morale, and with the current hiring environment 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 on 100 despite paying $ 16 an hour.

The owner also said McDonald’s previous rating systems were more collaborative and featured mutually agreed targets. “You can’t make things better by telling my managers that they have failed,” the person said.

McDonald’s defended the new evaluation plan.

“We must remain focused on maintaining our world-renowned standards of excellence in our restaurants. This comprehensive performance management system, designed with continued input from franchisees, will offer tailored support and coaching to restaurants to help them deliver a seamless McDonald’s experience that keeps customers coming back, ”the company said. “To give restaurants time to learn the new system, optional learning visits will be offered in 2022 before the official start in January 2023.”

The company added that the rating framework includes customized resources that will help franchisees improve day-to-day performance and increase sales, profitability, and guest counts.

Companies continue to come under pressure to attract and retain workers. Labor costs have also risen at McDonald’s and other fast food businesses, causing affiliate prices to rise along with wages, and competition for workers is stiff. There is also a growing union drive in several restaurants and retail outlets nationwide, with Starbucks the workers leading the charge in the food sector, while the workers support and try to organize to get better benefits and conditions.

Tensions with affiliates 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 that the company’s different ownership groups reflect the company and different viewpoints. Owners and the latest McDonald’s they publicly clashed over technology tariffs McDonald’s said it was owed by the owners thanks to unclaimed dues and separately, to support the pandemic.

The National Owners Association, an independent franchisee advocacy group for McDonald’s owners, recently shared an internal PACE survey with its members, which was seen by CNBC. The survey showed that 71% had been trained in PACE so far and only 3% of the restaurant operators who responded said the planned evaluation curriculum accurately reflects the operations. More than half felt it was not accurate or somewhat inaccurate. The survey was sent to 900 owners who received up to 500 responses.

Nearly a quarter believed it would aid or in some way aid operations. Additionally, 64% said the staff environment has gotten worse or somehow worsened, which speaks to the frustrations owners have with launching this new system right now. More than 80% said it would not be useful for the company’s “people first” goals. A separate letter from the NOA Board to its members stated that leaders were working with the company on recommendations to reduce program pressure.

“Who in their right mind would add so much pressure to a widely known struggling industry [and its] addressing the worst labor shortages in history, inflation and rising prices, fear of pandemic tremors and so much more by instituting such a laborious program like PACE? ”said a source in the franchisee’s leadership with knowledge of the situation.

A recent survey by sales firm Kalinowski Equity Research of over 20 owners who operate over 200 restaurants also expressed some disapproval of PACE. Includes operator comments highlighting what some believe to be the reckless moment of launch.

“PACE audits will prevent us from building sales and increase our employee turnover. The worst time in the history of the system to implement such a program,” said one interviewee. “Stop the PACE programs, which will decimate the personnel we need to operate,” said another. Overall, the proprietary survey ranks franchisee-company relationships 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 recovering from the pandemic and system times are “deaf.” The owner has more than 500 employees.

PACE will have “strangers with little or no restaurant experience coming in, evaluating and interacting with my staff,” this person said. “The problem for me is not evaluation, the problem for me is that my workforce is fragile.”