– by d Burleson 
From 2012 to 2014, I blasted McDonald’s in my weekly reports, faxes, newsletters and seminars as a company that was confused about where it was headed, lost sight of what their customers really wanted (really, who wants a healthy veggie wrap from McDonalds, especially when it slows down the drive-thru lane and costs franchisees more money to make) and failed to leverage the fact that most consumers were moving down or up in their spending habits, not staying in the middle.

 

Despite the relentless badgering I gave them here and elsewhere, I stood by my position that they would eventually figure it out. They always have and if you put a gun to my head and asked me who will be here 100 years from now, McDonalds or any of the froufrou start-up burger chains, my money is literally on McDonalds.*  

 

* I’m a shareholder.

 

I’m pleased to announce, if you haven’t been paying attention, that McDonald’s just reported their best earnings in years and three consecutive quarters of earnings growth, surprising even the most-favorable Wall street estimates.

 

How did they do it?

 

First, they streamlined operations for franchisees. No more trying to make healthy smoothies and wraps at the same time slowing down the line and hurting burger and fries sales. That is, they cut costs. Second, they decided to sell a bunch of stores back to franchise owners because those boots-on-ground entrepreneurs know how to run their stores better than the suits sitting on the board. Third, they offered some breakfast items all day.

 

Customers of McDonalds have been asking for all-day breakfast for decades. I don’t know how many movies I’ve seen make fun of the fact that breakfast ended promptly at 10:30am across the country for McDonald’s. Shocking statistic: Egg McMuffins (the one item off the menu at McDonalds that I’ll actually eat) account for nearly 25% of the company’s revenue. 

 

You should hear the sound of a record screeching to a halt in your mind right now. 25% of revenue from a single menu item and the company only sells it until 10:30am?

 

What in the world were they thinking?

 

Luckily the new CEO and board made a smart decision to trot out the Egg McMuffin all day and their profit was up 35% last quarter.

 

Here’s the lesson for smart business owners that McDonald’s should have figured out a long time ago: 20% of the things you offer (products or services) represent 80% of your profit, many of the things you offer provide zero profit and a good number of the things you offer actually cost you money to offer them.

 

We all allow things to slowly creep into our businesses that have no business being there and can kill our profits. McDonald’s did it when they messed up their efficiency and consistency by trying to get into the health foods business with smoothies, wraps and salads.

 

Your job, as responsible business owner, is to go figure out which ones fall into which category. Then, maximize the profit makers, minimize the profit-neutral and quickly kill the losers. That’s it.

 

Sounds easy, right? Unfortunately even big successful companies like McDonald’s with hundreds of paid consultants and advisors took years to figure this out. 

 

Go home tonight and ask of your team leaders and office managers:

 

“What makes us the most profit in this business?”  

 

Now go figure out how to do more of those things. You’ve probably got your own version of selling Egg McMuffins only until 10:30am right under your nose.

 

Can you tell me how many dollars per hour must be generated per clinical chair in order to break even? How much for a 40% profit margin?

 

Can you tell me how many visits are required for each type of treatment in your office (comprehensive fixed appliances, Invisalign, interceptive treatment, TMD, lingual orthodontics, etc.) and do you have a system to monitor when things start to veer off the rails?

 

It’s been my observation in consulting with small practices, doing under $1 million in annual revenue, and large practices with over $20 million in annual revenue, that business owners have a habit, regardless of size or experience, to say yes to things too often without properly analyzing their impact on the bottom line.

 

A few weeks ago I taught you to ask of yourself constantly:

“If I were about to buy my own practice back from myself, what glaring areas would have to be fixed before I would buy this thing?”

 

In other words, what products, services, or systems have you allowed to creep into your practice that are killing your profit and diminishing the net worth of your business? Go focus on and fix them as if a hole blown into the hull of a ship. This economy is not the time to be passive about fixing the flaws in your business. 

 

Now, quickly put a system in place that alerts you to the holes in the hull WAY before they start leaking too much water. 

 

Jim Koch, founder of Sam Adams brewery, who subsequently just published a fantastic business book, reviewed at The Burleson Files this week, calls it his “Fuck You” rule.

 

At Jim’s company, any employee, regardless of rank, can tell anyone else in the company to go take a hike as long as they have a reason and explanation as to why they feel that way.

 

McDonald’s for years had customers telling them loud and clear to go “Fuck You” when they couldn’t order an Egg McMuffin at 10:31am. It simply took McDonald’s opening their ears to hear what was being shouted. The larger your company grows the more resistant and insulated it will become from hearing the “F-you’s” being shouted by customers, employees, and future profits. Ignore this rule at your peril.

 

Moms who can’t get a 5pm new patient examination in one of your offices will gladly go somewhere else where they can. Adult patients who don’t feel comfortable sitting next to 12 year olds in an open bay will gladly go somewhere that has private treatment rooms and a team that caters to them. Families on a budget will quickly choose me over my competitors when I offer 48 or 60 month payment terms. 

 

What have you allowed to creep into your practice that has stymied your growth? Where are the “FU’s” being shouted but you resist hearing? Growth sits on the other side of your answers to this question. 

 

Do you think it’s impossible to grow in this economy? My top clients would disagree. With 8% to 58% growth in my top coaching group last year alone, we’re finding ways to let money flow to the offices of our smartest doctors. I’m fairly certain all of them would have made the decision to sell Egg McMuffins all-day at McDonald’s years ago. 

 

Where are YOUR Egg McMuffins waiting to be unleashed? Go kill the creep that has allowed them to stay hidden.