McDonald's Hamburger Hell

Richard Steinig remembers beaming as if he had won the lottery. There he was, all of 27 when he became a junior partner with a McDonald's Corp. (MCD ) franchisee in 1973, just a year after starting as a $115-a-week manager trainee in Miami. "It was an incredible feeling," says Steinig. His two stores each generated $80,000 in annual sales, and he pocketed more than 15% of that as profit. Not bad at a time when the minimum wage was still under $2 an hour and a McDonald's hamburger and fries set you back less than a dollar, even with a regular Coke.

Fast-forward 30 years. Franchise owner Steinig's four restaurants average annual sales of $1.56 million, but his face is creased with worry. Instead of living the American Dream, Steinig says he's barely scraping by. Sales haven't budged since 1999, but costs keep rising. So when McDonald's began advertising its $1 menu featuring the Big N' Tasty burger, Steinig rebelled. The popular item cost him $1.07 to make--so he sells it for $2.25 unless a customer asks for the $1 promotion price. No wonder profit margins are no more than half of what they were when he started out. "We have become our worst enemy," Steinig says.