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Comment by upghost | Hacker News Reader

Ok... you got me. Can you unpack this a bit? Are you saying the consulting services, like, launder techniques and IP from their clients and reuse it other clients or...?

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Yes. Part of why you use a consultant like McKinsey is because they are talking to everybody else. So when they tell you "best practices" they are telling you what everybody else is doing.

In a way that cover's everyone's ass legally* of course. But that's what they're doing.

EDIT: * - by "legally" I mean allow information to be shared in a way that precludes legal repercussions but I do not necessarily mean adherence to the law.

Private equity firms and large management consulting firms gain extreme visibility and influence into an entire sector. If mckinsey recommends raising prices, its likely everyone in your sector is raising prices. If everyone in the sector does the same action, then no one loses out.

I wouldn’t call it collusion but, of course, they’re aggregating what leading companies find to be best practices—although they presumably don’t share individual company IP. Not much different really from when tech folks go to conferences.

Companies benchmark and consider industry best practices all the time. If they don’t they’re idiots.

Im not a huge fan of management consultants generally, but consultants and analysts can provide useful third party perspectives, in part because they talk to a lot of companies that you may have mess directly with access to.

Take a look at publicly traded companies post pandemic to see this effect.

Take McDonalds for an example, they are running around 30% margins and you see on social media customers complaining about prices.

Why don't those customers seek an alternative business?

The rest of them also follow pricing "best practices" so you have no where to run to.

Yum Brands is at ~20% profit margins, Shake Shack is at 3% or less profit margins, and QSR is at 10% to 15% profit margins.

There must be a reason McDonalds earns so much more. As far as I understand, McDonald’s has a significant real estate component to its business (which is technically selling its brand/real estate to franchisors, not selling food), bolstered by its very strong brand with loyal customers (that the others don’t).

https://www.mashed.com/178309/how-much-mcdonalds-franchise-o...

> The cost of running a business, especially a restaurant, can really eat into its profits. At the end of the day, McDonald's only keeps around 16 percent of the revenue its company-owned stores make, but it keeps 82 percent of the revenue franchisees pay out to it.

That’s what excellence looks like. I think chik-fil-a has similar net margins. QSR is more typical for their industry. I think Starbucks is down around 10-12% net margins too.

20% used to be considered a high margin business, like luxury vehicles. That's a shockingly high margin in food.

Because the margin isn’t in food. It’s in franchising (selling a platform and brand) and real estate.

Yes their libraries are their most valuable asset. They also collect benchmarking data across companies to help you gauge how you are doing. You cannot ask aws about their practices but you can ask McKinsey about the market leader benchmark practices

AWS is probably guarding their IP, there is a chance McKinsey is just making things up, you can't verify it.

The way that it works is that if you want access to the benchmarks you need to provide your data.

But in general there is no way to verify whether the consulting company is lying or not. They have been caught pants down multiple times recently.

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