McDonald’s is making some super-sized changes that will affect how its US franchisee ownership structure will operate moving forward.

Starting next year, the fast-food chain plans to drastically alter parts of its franchise business policies, which include changes to franchise-application standards and signing of new locations by existing franchisees, according to an email penned by McDonald’s US president, Joe Erlinger.

The changes, in part, are an effort to diversify the company’s franchisee pool. McDonald’s also plans to more strictly review renewals of 20-year franchise agreements: The “term is earned, not given,” the company said in a statement.

• It will now take into consideration factors like performance history to evaluate if franchisees are eligible for new 20-year agreements and will treat renewal applications the same way it treats new applicants.
• Additionally, when evaluating potential franchise owners, McDonald’s will no longer give preferential treatment to the immediate family members of current franchisees.

Evaluating all applicants the same way “will provide a consistent process based on equally applied criteria. For all approved candidates, we will provide a comprehensive onboarding and training program to best position them for the process,” McDonald’s said in its statement.

Not lovin’ it: The move comes on the heels of the company facing backlash after announcing a new grading system for franchisees that is set to go into effect next year. Plus, some Black-owned franchises have filed racial-discrimination lawsuits against the chain, with a high-profile case involving former MLB player Herb Washington ending in McDonald’s purchasing 13 restaurants owned by Washington in a $33.5 million settlement.

• That suit alleged that McDonald’s discriminated against Washington “by having him helm low-volume restaurants in Black neighborhoods and by forcing him to downsize his store base years later after grading his locations unfairly,” according to CNBC.
• McDonald’s noted that “the court did not find that the company violated any laws,” per a statement.

In March, McDonald’s Global Chief People Officer Heidi Capozzi penned a letter to all of McDonald’s global staff, franchisees, and suppliers, stating that all officers “are accountable for developing strong, diverse employee talent pipelines.”

• In December, McDonald’s announced plans to spend $250 million over the next five years to help diverse franchisees finance their locations.
• About 93% of McDonald’s 38,000 locations globally are locally owned and operated.

The big picture: As DE&I standards have broadly come under scrutiny in recent years, McDonald’s hasn’t been the only major company to pledge change. Starbucks said in January it will refocus its diversity and inclusion efforts among lead roles in corporate and manufacturing roles this year, while Best Buy last year committed $1.2 billion through 2025 to diversify its suppliers and business partners.—KM

Earlier this week, we shared how Goldfish is winning over Gen Z, recapping our chat with Danielle Brown, the VP of cookies and crackers at Campbell’s. But Retail Brew’s recent Checkout forum was packed with more insights.

We also spoke to Claire Tassin, managing director of retail and e-commerce analysis at Morning Consult, to shed some selfie ring light on the generation. Here are a few takeaways from our conversation:

The price is right: “When you think about who Gen Z is, where they’re shopping, we know there’s a lot of price sensitivity within that generation,” Tassin told us, adding that a part of this is because a lot of Zoomers are at the early stages of their careers (if they’ve even started working yet). “But there’s also a sense of, ‘I’m going to get the best bang for my buck.’ A lot of what drives their purchasing is value, like everyone.”

Red light, green light: “When I see brands get Gen Z wrong, we’re trying to put them in a box and say that they are this completely different brand new animal that we’ve never seen before,” Tassin said. But when she digs into “what drives Gen Z’s purchasing behavior…we see that the same things that drive everyone else, like I mentioned—good value for your dollar, being trustworthy in terms of having good customer service—these are all things that matter way more to Gen Z than things like sustainability.”

If you’re caught off guard, Tassin breaks it down further: “Sustainability absolutely matters to Gen Z—it matters to Gen Z more than any other generation. But I think where we tend to see brands misstepping is when we think that they only care about one thing, when we kind of think about them as the young activist generation, and forget that we’ve still got to win them on the basics and on the table stakes.”

Where are we? Gen Z is always online, Tassin said, but “when it comes to shopping specifically though, you see that online-offline blend more so than any other generation.”

• “They do generally prefer to shop in stores, but they’re also least likely to have a preference overall, meaning that they don’t necessarily see as much differentiation between all of the channels that they have to tap into to connect with different brands. So they’ll catch us on TikTok, they’ll come to our websites, and if we do have a physical presence, they’ll come there too, which means they can be really hard to keep up with.”

🦫 Put in the work: And even if a brand gets everything right, stay on your toes. “What’s hard about Gen Z is you can win their loyalty, but also, you kind of have to keep earning it over and over and over again because they’re going to keep reevaluating you,” Tassin explained. “They’re going to keep holding you accountable to how you won them in the first place.”

Click here to catch the entire conversation.—GT

Today’s top retail reads.

Huff and puff: A reliance on data and trend-prediction tools, rather than designer craft, has led brands and retailers’ clothing to become largely homogenized. Exhibit A: the puff sleeve. (The Atlantic)

Climate control: From water repellency to airflow-maximization, how brands are making clothes for the climate crisis. (Vogue Business)

Passion 4 fashion: The resurgence of Y2K trends has kickstarted a comeback for doll-maker Bratz, which has included collaborations with fashion brands like Cult Gaia and GCDS. (WWD)

Primed for success: Business is boomin’ on Amazon. Elevate your brand’s performance on the platform with key insights and winning strategies for Prime Day + beyond with Feedvisor’s vital trend data, collected from over 1k US brands. Start here.*

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• Glossier will hike the prices of some of its products as it faces higher shipping and production costs.
• The McKinsey Institute for Black Economic Mobility’s latest report found that Black beauty consumer needs remain a “largely untapped market” and represent a $2.6 billion opportunity.
• Zalando shares sank 17%—the most in over three years—after it cut its profit outlook for the year.
• Zomato, the Indian food-delivery company, will acquire Blinkit, an instant-delivery startup, for $568.1 million.
• The Supreme Court overruled Roe v. Wade, dissolving the constitutional right to abortion after about 50 years.

Snap poll: Do you think retailers and brands should weigh in and address the Supreme Court’s decision?

• Yes
• No
• Not sure

Three of the stories below are real...and one is most definitely not. Can you spot the fake?

1. After 85 years, Kraft is simplifying the name of its Macaroni and Cheese to Kraft Mac & Cheese.
2. A New Hampshire distillery is making whiskey infused with invasive crabs.
3. Hellmann’s partnered with Kiss for a set of press-on nails promoting its new Spicy Mayo Dressing.
4. In other condiment news, French’s debuted a ketchup popsicle dubbed the “Frenchsicle.”

Keep reading for the answer.

Catch up on the Retail Brew stories you may have missed.

• Making the case for Kellogg’s three-way split
• From spicy flavors to TikTok challenges, how Goldfish is reaching Gen Z
• Where are they now: instant-delivery edition

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