Dive Brief:

• In a 59-page guide, McDonald’s outlined its plans on how to reopen dine-in areas across its 14,000 domestic restaurants. The Wall Street Journal viewed the guide, which includes bathroom cleanings every half hour and digital kiosk cleanings after every order. 
• The guide also outlines purchase recommendations that will incur additional costs for its vast franchisee system. Among those costs are foot-pulls to allow customers to open bathrooms without touching door handles, as well as a $718 touchless sink, $310 automatic towel dispenser, masks and gloves. 
• "All restaurants must implement these standards, in addition to state and local laws, before reopening a dining room," Joe Erlinger, president of McDonald’s USA, said in a statement Wednesday. 

Dive Insight:

It’s clear major favorite fast food restaurants will soon look significantly different than what we’re used to, and those changes require added costs. And while the costs of the automatic towel dispenser and touchless sink for McDonald’s may seem steep on paper, they are one-time expenditures, versus the investments that will be needed for disposable masks and gloves for the dozens of employees at each McDonald’s.

Shake Shack’s CFO Tara Comonte alluded to similar added costs during that company’s Q1 earnings call, stating: “We’re encountering a number of new and increased operating costs in the Shack specific to COVID-19. These include supplies and equipment we deem necessary to keep our teams and guests safe, such as face coverings and gloves, additional and secure packaging for all orders, directional signage and cleaning supplies, among others, and we expect these to be ongoing for a period of time.”

Another potential increased cost from this crisis is labor. McDonald’s franchisees wrote that there are 100,000 less employees in the system now versus when the crisis began in early March, according to The Wall Street Journal. Those employees aren’t expected to rush back due to fears of contracting the virus or because they’re collecting more money on unemployment than they would at their hourly job. This means restaurant chains may have to boost their pay or incentives to lure employees back. McDonald's will provide bonuses of 10% of pay earned in May to employees at its company-owned restaurants, which was inspired by franchisees that have provided enhanced benefits during the crisis. 

McDonald’s is offering a bit of support to its system. CEO Chris Kempczinski said in a video message to employees and franchisees that McDonald's would spend the equivalent of a month of marketing support in wholly owned markets, which equates to about $100 million. The company also plans to provide more financial help to locations that were most negatively affected by lockdowns lasting more than two months, and in areas that have fewer restaurants with drive-thru service.

Through the company’s “distressed restaurant team” program, owners who are struggling can apply for relief by specifying sales and traffic losses during the lockdown, the impact to their market and specifics about how much help they’re requesting from corporate, according to The Wall Street Journal. 

Prior to the pandemic, McDonald's extended its remodeling deadline to 2022 in response to franchisee grievances about the cost of the projects. Those goalposts may have to be moved again to help franchisees get through the lingering effects, and added costs, of the coronavirus crisis. 

Indeed, since the outbreak, many major projects have been put on hold at a variety of chains. Wendy’s has abated its national marketing fund contribution from the breakfast daypart in 2020 and extended reimaging and new build requirements by one year, for example. 

Such delays may be necessary at this point. As the McDonald’s guide reads: “We only get one chance to do this the right way.” And, as the largest restaurant company in the country by sales, McDonald’s plan will no doubt be a benchmark for the industry.