We're a global leader. Certainly we're doing something right. ABN AMRO Chicago Corp. But longer term, the 55-cent promotion, which is expected to apply to a different sandwich each month, could backfire. However, Merrill Lynch analyst Peter Oakes applauded the 55-cent promotion, which he said will help McDonald's build incremental customer traffic. Some franchisees are concerned, however, that the promotion, which could run about 12 months, may hurt profit margins.
Franchisees are interested in top line sales, but only as it relates to bottom line profits.
McDonald's, which has not commented on the details of its planned promotion, said its interests are aligned with those of its more than 2,700 franchisees in the United States. About 80 percent of McDonald's U.S. restaurants are franchises. While competitors such as Wendy's International Inc. and Burger King, a unit of Grand Metropolitan Plc, said they will not follow with price cuts, McDonald's promotion likely will draw some customers away. They're going to take some business from people.