4Thought Blog

Financial health is critically important to your success as a McDonald’s Owner/Operator. To help you measure your financial health, we’re doing a series of articles on the McDonald’s financial standard ratios, what they entail and how to improve them.

If you missed them, check our prior articles Understanding and Managing Financial Ratios for McDonald’s Franchisees and An Important Metric for Franchisees: Trailing Twelve-Month Liability Turnover.

The next financial viability measure we’ll discuss is the estimated net equity percentage. It represents the estimated percentage you own of your business. It’s the hypothetical amount of money that would be remaining after your business is liquidated before paying income taxes.

McDonald’s minimum net equity percentage to be eligible for growth and rewrite is 25%. The estimated net equity is calculated by reducing the estimated restaurant value by the business's net debt. Dividing the estimated net equity by the estimated restaurant value will provide the estimated net equity percentage.

Financial health is critically important to your success as a McDonald’s Owner/Operator. To help you measure your financial health, we’re doing a series of articles on the McDonald’s financial standard ratios, what they entail and how to improve them.

If you missed it, check our introductory article Understanding and Managing Financial Ratios for McDonald’s Franchisees.

In today’s article, we’re going to address the Trailing Twelve-Month Liability Turnover. This ratio represents the number of days of next month’s sales needed to cover any working capital deficit.  

But before we get into the calculation of the ratio, let’s address the concept of working capital.

Owning and operating a McDonald’s franchise business is complicated, and even more challenging if you’re looking for growth and rewrite.

A key to those opportunities is maintaining your financial ratios. McDonald’s Corp. established these ratios to ensure financial stability. A solid understanding of the ratios that make up financial viability, how they are calculated, and why they are important will enable you to make any necessary adjustments to improve your financial viability and often your bottom line.

This blog was written by our guest author, Dan Murdoch, Vice President of Marketing, Harri

Before COVID-19, restaurants had a significant labor challenge, typically referred to as the “talent crisis” or “war for talent.” Unemployment rates were at a five-year low and minimum wage rates were rising across the country.

To better define the challenge, there were simply too many restaurants, massive job growth, a smaller talent pool given the same level of eligible employees, particularly among teenagers, as in 2007, triple-digit turnover rates, cyclical seasonal hiring, and a struggle to find talent that was capable of representing a brand’s ethos.

The U.S. Small Business Administration has received more than twice the amount of Restaurant Revitalization Fund requests than they have money for, though the National Restaurant Association is advocating for more funding.

As of May 12, there were 266,000 RRF applications seeking a total of $65 billion, more than double than the $28.6 billion fund total.

Applications were accepted starting May 3 and for the first 21 days, the SBA is prioritizing funding applications from businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals. Applications from that group alone totaled $29 billion.

Applications for $28.6 billion Restaurant Revitalization Fund will be accepted starting at noon Monday, May 3, the U.S. Small Business Administration has announced.

The grants are for restaurants with 20 or fewer locations to help cover their pandemic-related revenue losses in 2020.

Restaurants can start registering for accounts now. In preparation, the SBA recommends qualifying applicants familiarize themselves with the application process in advance to ensure a smooth and efficient application experience, specifically by:

This blog was written by our guest author, Brian Hassan, Co-CEO, Kickfin

For years, restaurant employers have struggled with high employee turnover rates. If they are able to find and attract qualified, dependable employees—a feat in and of itself—ensuring retention often poses the next challenge.

And it’s an expensive one. Recruiting, interviewing, onboarding and training candidates are non-revenue generating activities, and they take a lot of time. This doesn’t take into account the “softer” implications of dealing with employees coming through a revolving door, like the impact it has on relationships and company culture.

While the hospitality workforce, by nature, will always be more transient, restaurant operators do have the power to minimize turnover on their teams. Here are five ways employers can ensure that their most reliable, hardworking and talented employees stick around for the long haul.

The new federal stimulus bill (American Rescue Plan Act of 2021) includes a special fund – the new $28.6 billion Restaurant Revitalization Fund – to benefit the hard-hit restaurant industry by providing grant monies in addition to the Paycheck Protection Program loans and other pandemic relief measures.

While we await additional guidance from the SBA, here are the details that are currently available (subject to change).

While the two biggest benefits for McDonald’s Owner/Operators in the second federal stimulus were changes to PPP loans and the expansion of Employee Retention Tax Credit, there are some other benefits franchisees should consider, as well.

Both the Work Opportunity Tax Credit and Empowerment Zones have been around for some time but the second stimulus – formally known as 2021 Consolidated Appropriations Act – extends both of them for five years, providing a long window for tax planning opportunities.

Here are the details you’ll need to consider for these opportunities:

With the 2020 election in the rearview mirror, businesses are looking forward to beginning 2021 with more clarity. Restaurants are particularly keen to understand what new legislative measures have passed or are on the horizon as they continue to navigate the acute—and devastating—impact of the coronavirus on the industry.

Of most interest is the fate of the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed To Survive (RESTAURANTS) Act, passed by the House of Representatives in October.

If passed by the Senate, the act would provide to non-publicly traded restaurants $120 billion of relief through a grant (rather than a loan that is provided under the Paycheck Protection Program) that would cover the difference between 2019 and 2020 revenues. Restaurants would be able to use the funds for any expenses deemed essential by the secretary of the Treasury Department.