McDonald’s Makeover: 7 Things You Didn’t Know

A tour of newly renovated McDonald’s units around Tampa, Fla., revealed details of the fast food giant’s plan


McDonald’s has touted much about its plan to revamp most of its 14,000 domestic locations, ditching the bright colors and iconic roofs of the past for ultramodern interiors and exteriors.

However, a recent tour of newly renovated McDonald’s units around Tampa, Fla., revealed new details of the quick-service giant’s plan.

Securities analysts Larry Miller of RBC Capital Markets and Jeffrey Bernstein of Barclays Capital, who participated in the tour, noted not only the new facades, digital menu boards and fancy new seating, but also several operations-minded upgrades, including a new POS system and dual drive-thrus meant to speed service times and boost throughput. They also learned more about the costs involved in the reimaging plan.

Based on reports by the two analysts, here are seven things industry watchers may not know about McDonald’s undertaking:

1. Reimaging work also includes plenty of rebuilding

McDonald’s expects to upgrade 800 restaurants in 2011, including 600 reimages to interiors and exteriors as well as 200 total rebuilds or relocations, Miller and Bernstein wrote in their reports. The company completed 100 upgrades in the first quarter and is projecting another 100 in the second quarter, implying an aggressive expansion of the program in the second half of the year.

Miller, Bernstein and others toured reimaged units in Clearwater and Brandon, Fla., which required four to six weeks of construction to upgrade, as well as a rebuilt location with McDonald’s new interior and exterior flourishes in Seffner, Fla. The rebuilt restaurant opened in November 2010 after construction began the prior August. The securities analysts noted that either the dining room or drive-thru remained open throughout construction.

2. Not all restaurants will be revamped

Miller and Bernstein both said 1,800 locations of McDonald’s more than 14,000 domestic restaurants have the new look and feel, and there is plenty more opportunity for upgrading the system. About 6,100 units are candidates for reimaging and another 2,500 could be rebuilt or relocated, the analysts wrote.

However, nearly 4,000 McDonald’s locations will not be considered for remodels, Miller wrote. About 1,000 units do not generate sufficient volume to justify the investment, while another 2,600 locations are nontraditional units, like on-site restaurants in Walmart stores, which are not candidates for the program, he said.

3. Costs for reimages vs. rebuilds

The average cost to reimage a McDonald’s restaurant was $550,000, with a range between $400,000 and $700,000 depending on the location and condition of the unit, the analysts wrote. In these cases, McDonald’s Corp. contributed 40 percent of the cost of the remodel, or an average of about $220,000.

A restaurant needing to be rebuilt or relocated required more capital expenditures from both McDonald’s and its owner-operators. Those investments ranged between $1.7 million and $2.1 million, including about $1 million to $1.2 million from McDonald’s Corp. and about $700,000 to $900,000 from franchisees.

4. Impact on sales

Miller of RBC Capital Markets estimated that the reimage and rebuild efforts could add 50 basis points a year to McDonald’s annual same-store sales over the next several years. Both he and Bernstein of Barclays Capital wrote that a reimaged restaurant experienced an average same-store sales increase between 6 percent and 7 percent above the rest of the market in the first year, while totally rebuilt units had same-store sales increases between 15 percent and 20 percent.

“The rebuild we visited in Tampa cost a total of $2.4 million and saw average unit volumes rise from $4.1 million prior to the rebuild to $4.8 million today, a 17-percent increase, though we note the store has only been open for six months,” Bernstein wrote.

That 5,766-square-foot restaurant had 128 seats, he noted.



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47 Comments

Teachertocook's picture

Love the upgrades...

Teachertocook's picture

Looking to buy stock in McDonalds...

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While the majority of the menu items at McDonald's do not fit the qualifications for "healthy eating", it is possible to have a healthy meal there for under three dollars: the grilled chicken chipotle wrap with a side salad and light balsamic restaurant contains 305 calories and 10.5 grams of fat. I wash it down with ice water.

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It' McDonalds. If I go there, 3 or 4 times a year, I'm not going for healthy food like apples in my Happy Meal. I'm going for the fries and shakes. Leave it alone and go to a health food store if you want healthy meals.

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What would Ray Kroc have to say about this?

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Who cares? The food still tastes like masking tape.

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McD replaced several of their restaurants in my area of the past couple of years.

The result? Larger restaurants with resulted in smaller parking lots. My "favorite" McD now has less than 1/2 the parking spaces it had before the remodel.

Possibly, McD should not have Roland do all their site design?

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Repackaged junk food is still Junk! The Big Mac doesnt deserve any positive press , and should be ignored.

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They upgrading the quadruple big mac too?

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the best sandwich ever they dont offer is a quartermac. basically its a big mac with the meat patties replaced with quarter pound patties. yummy!

its so good that sometimes i buy a big mac and a double qpwc ........swap out the meat and eat.

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They seriously need to upgrade the one in Belle Chasse, LA. I am seriously starting to wonder if every employee there has a mental defect. It takes forever to get your food and half the time the order isn't even right. They need to do some serious improving at that location.

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If a person is serious about healthy eating and being trim then they have no business eating at a Mc Donalds restaurant. Just look at the size of the average customer that frequents a mcdonalds, it is a telling sign.

Interestingly Mrs. Croc, the wife of the founder of the chin, willed a large amount of money to build community recreational facilities across the U.S. Nice gesture toward the health of our nation.

Mr. Got us fat and Mrs. Is helping us give it back.

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I used to go to McD inside a walmart in uniontown pa regularly. After numerous times of getting my order wrong, getting horrible food, or getting otherwise lousy service I gave up going to McDonalds. Won't ever eat at one again unless there are absolutely no other choices & I can't wait long enough to get something good tasting.

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I was in New York City 2 years ago. We stopped at a McDonald's in Manhattan. It had brass railings, ferns, a winding plexiglass staircase up to the SECOND FLOOR, and a BABY GRAND PIANO complete with candelabras. Only in New York!

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What really turned me off was a few years back when they allegedly spent $100,000,000 to select a new oil to fry the french fries in. According to the Wall Street Journal it took 2-3 years of experimenting and evaluating taste, etc. and then they kept the oil selection secret from the public.

Turns out they selected canola oil, the cheapest manufactured oil on the planet. Won't go into the details, but "rapeseed oil" as it was originally called, was until the last 20 years was known as an industrial lubricant until the Canadians found out a way to sell it as a food.

Oh Well! Improve the store and the marketing, not the food.

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I have noticed a big improvement in food quality at Mc Donald and I tend to prefer that they take the money that they would be remodeling and use it to lower prices. I'd also like them to sell a Mc Doggy Meal consisting of a little bag of kibbles or biscuits, a plain patty and a bowl (shallow cup) of water. I really think people would buy it especially while traveling

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would they buy it for themselves or for their dogs? Is there something about travelling that makes you crave dog food?

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They don't like Big Macs?

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Very funny. Many of us do travel with our dogs and it would be nice to able to feed them quickly and easily through a drive thru as well.

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Mc Donald's should create a Mc Gym so when people binge then they take more money on the other side, making people lose their BigMa'calories for a $1 a day session, does it make sense?

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If any of you hob-knobbers had a clue, you'd know that McDonald's HAS "revamped" their menu and their food quality/choices. Stop being so high and mighty and condescending and critical. Why do you care anyway? You all are, for the most part, too d a m n snobby to dare eat at a McDonald's anyway. Get over yourselves.

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When visiting family recently in Casper, Wyoming, we visited a remodeled McD's for breakfast. I was very impressed by the new look. It was inviting and comfortable.

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Idk I think that people really exaggerate how unhealthy the food is. I mean sure, it's not great for you, but blaming it for the obesity problem? Give me a break! No one gets fat eating one cheeseburger, small fry, and coke once or twice a week. The calorie count in such a meal is a little high, but acceptable. The trouble starts when people start ordering Big Macs, large fries, a half gallon of soda almost every day.

These sort of food joints feel a need/want of society. If we're overindulging and letting common sense fly out the window when we enter the store, that's our own faults.

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thank god another who feels we should not pass the buck-or look too blame others for our own faults, i'm heavy because i love to eat and micky d's just happens to be my favorite and ronald didn't make me bend my elbow
and we never went to micky d's as a child my 1st time there i was already an adult. no ronald never enticed me or my parents. the people in America need too stop looking for scape goats and look in to their own back yard for their own problems. i e - to fat -starving them selves -the song lyrics made them do it. humans all over take responsibility for yourselves enough said.

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I don't think that all of that work/money was necessary. I'm pretty confident that the boost in sales is only because of the new free wifi feature. If there's anything that Americans like more than cheap easy food, it's free internet.

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Dear McD's.

As a barely customer from a long time one...

We don't care how your stuffer shack looks.

Please have healthier food, and real meat.

That is all.

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They do have healthier food. Order a salad without the dressing.

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"revamped" mc-ds here in myrtle beach a mile from my apartment... out of laziness I find myself "eating" here after a long day of work or sometimes to grab a quick breakfast "meal" I must say some items haven't changed a bit but the angus burger is tolerable on some days... the chicken sandwich (premium) is worthwhile, the select strips are pretty good, and the sweet tea will turn you into a fat southerner in no-time!

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Will new digital bill boards allow the burger count to come back? I surely hope so!

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Now if they would only improve their food.

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