McDonald's (MCD) executive management is finding out that you cannot satisfy all of the people all of the time.
As shares rise on the open on Tuesday, many are lauding the defensive nature of the stock and its efforts to bring its brand into the 21st century.
Analysts and experts have begun to warm to the modernization plan that CEO Steve Easterbrook has slated in order to reinvigorate the golden arches into the coming years.
The plan is a multi-billion effort to renovate 14,000 locations. The renovations include installing automated ordering kiosks, adding pickup and delivery options, and changes to the overall restaurant layout. Additionally, the restaurant's app aimed at fostering brand loyalty and store traffic is being well received.
"We believe these efforts will result in sustainable out-performance and earnings delivery," Keybanc analyst Eric Gonazalez said of the effort.
Jim Cramer recently lauded the company's efforts to remodel as a necessary step in the current restaurant industry.
"I have been saying that McDonald's is putting through a very important domestic restructuring that is raising productivity while reducing costs," he wrote. "The remodeling program is lifting those franchises that are getting the makeover."
Piper Jaffray analyst Nicole Miller Regan wrote that the effort encompasses the catalysts that will help the company move away from its deep discounting model and possibly unlock margin expansion.
The short-term headwind from the companies spending effort amid the remodel may not blow as strongly as was once expected either, as the company has elongated its modernization effort's schedule.
"The company's current 2018 capital expenditure guidance includes $1.6 billion earmarked for U.S. reimaging efforts to support the expectation that about 50% of the U.S. store base would be converted by year end," Miller Regan said. "The remaining 50% of stores were previously expected to be completed by 2020 but are now extended out to 2022."
The extension is a positive for McDonald's corporate and shareholders, as the portion of the bill the company will pick up for that later date is significantly less than those coming in before the 2020 deadline. The effort further adds to the positive outlook for those monitoring the company's free cash flow growth expected as the effort wraps up.
Modernization Breeds a Mutiny
Despite the positives for shareholders, the effort to modernize has not been without resistance from franchisees who have pushed back against the sizable construction mandates they've been handed.
In fact, more than 1,000 franchisees are expected to convene for a quasi-union "National Owners Association" meeting on Wednesday and Thursday.
Many have highlighted the disconnect between restaurants that do most business via drive-throughs and thus would have no need for major kiosk installations and in-store renovations.
The pain adds to issues for franchisees that include increased labor costs, new policies on beef processing, and the consistent discounting prescribed by executives that has squeezed franchisee margins.
As the "store of the future" efforts continue, McDonald's will need to ensure it does not forget its franchise owners as it creates value for shareholders.