McDonald's franchisees are pushing back against costly upgrades. What's going on?

Yahoo Finance Executive Editor Brian Sozzi outlines the details of Bloomberg's recent report about the tension between McDonald's (MCD) and its franchisees.

There was a story, shout out to the Bloomberg team, uh talking about how franchisees are balking at spending $800,000 to remodel their McDonald's locations.

This is part of the company's uh 8 and a half billion dollar, I believe plan they put out a couple weeks ago at their investor day in Chicago to remodel their restaurants and according to the Bloomberg reporting, franchisees are balking because they are concerned and $800,000.

I mean, when you have a McDonald's franchise, you are essentially a small business owner. So to ask for, you know, ask these small business owners to spend $800,000 plus to remodel their location at a time where traffic is weak, at a time when it's unclear if traffic may turn around, is not exactly going to be met uh quite well by McDonald's franchisees.

So the McDon this story uh that Bloomberg is talking about and they're right to reporting this uh because it's something that uh Guggenheim analyst uh Gregory Frankfurt brings up too as well.

to turn that traffic around in McDonald's, you have to get better restaurants. You have to take the the technology and the new experience that McDonald's corporate has cooked up, no pun intended at their Chicago headquarters and get that into the franchise locations. And if that doesn't happen,

it's not likely that McDonald's is going to be out there growing traffic. And I was looking at Greg's note before I get to uh the real star performer of this little, this little bit. Uh he's not expecting same store sales in the US to turn positive again until next year.

And even then, he only sees about a 1.9% same store sales increase. He sees the third quarter negative in terms of US same store sales and the fourth quarter negative too. Those two results are not going to get McDonald's stock working up into the right again even though it has plunged.

We're going to put our second member on the Sazzy Unleashed Wall of Underperformers. And like I said when I unveiled the initial member yesterday in Nike CEO Elliott Hill, I take no great pleasure in this.

Uh it's not something I want to do. I'm a happy, smiley guy. Uh I don't like this board. I hope it goes away. But the second member on this board, you see Elliott Hill,

roll the dice, fire it up, guys. It's McDonald's CEO Chris Kempchinsky. So, we now have two members of the Sazzy Wall of Underperformers. It is McDonald's CEO Chris Kempchinsky.

The stock price has gotten crushed this year. It's gotten crushed the past year. It's gotten crushed the past five years. It's gotten has underperformed brutally versus the S&P 500 and Dow since Chris got named as CEO in November 2019.

And I am just not putting people on this list for the sake of doing so. I'm going to list out the reasons. Here we go. Huge stock price performance, underperformance, results in the US have hit the skids this year. I just told

you that the team at Guggenheim is looking for two more quarters of negative same store sales from this company. That's after a disappointing result in the second quarter. and last but not least, no indication year end will be materially better than the first half of the year financially for McDonald's.

And I'm now at the point, I wonder if the first quarter of 2027 will be any better than the third quarter or fourth quarter for McDonald's. I hope McDonald's turns it around. I hope Nike turns it around. But right now these two are the two bros on my wall and I would say both of them deserve that position.