A McDonald’s on Colfax Avenue has been home to a black market of consumer goods for the past several months. (BusinessDen illustration)
At the Cap Hill McDonald’s, on the corner of Pennsylvania and Colfax, a Big Mac comes with a lot more than fries.
Over three months, a BusinessDen reporter went weekly and watched staff at McDonald’s 505 E. Colfax Ave. location buy an assortment of items, some of them in their original packaging with price tags.
Throughout the evenings, uniformed employees come out from behind the counter to examine goods and buy them from customers who come in to trade what they have.
At times the seller shows the wares on the counter where staff hand over the food orders. In other instances, a McDonald’s employee comes out from the kitchen and conducts the sale at a table. Prices are negotiated and many of the sellers visit the store often to unload goods.
Over the months, BusinessDen saw perfume, soaps, chocolates, soccer cleats, diapers and small home appliances change hands or be solicited for purchase. Transactions take place when the restaurant is busy or slow – sometimes between two patrons and other times between people and employees.
BusinessDen never saw a McDonald’s employee sell an item.
On an average night at the McDonald’s it was common to see consumer goods strung about ready to be bought and sold. (Matt Geiger/BusinessDen)
An armed security guard is always stationed on the property – sometimes in a chair, sometimes walking around. Occasionally, they even help hand out food and drinks when the business gets busy.
The multiple security guards BusinessDen talked to said they were supposed to stop the illicit commerce inside the store, but they were powerless to do so because it’s the McDonald’s employees doing the buying. They said they believe that the goods were stolen.
Franchisees usually have strict rules to protect the parent brand.
“Franchise systems take great lengths to try to create and maintain a legal layer of separation between franchisor and franchisee … a franchisor does not want to bear any liability risk for what happens at any of its franchise locations,” said Eric Perkins, a franchise law attorney at Virginia-based Perkins Law.
Perkins, who has been an attorney for nearly 30 years, said that while it’s possible for a franchisee to be unaware of illegal activity in their stores, it’s their responsibility to make sure the establishment is compliant with “all applicable laws.”
“What you’re describing is the business owner’s worst nightmare … respondeat superior – meaning the buck stops with the boss or the boss is going to be liable for the misconduct of his employees and staff,” Perkins said.
“You don’t have to be too creative or have a law degree to see how allowing these sorts of activities could constitute a breach of contract under the terms of a typical franchise agreement.”
McDonald’s corporate office in Chicago did not respond to multiple email requests. The company purchased the Colfax real estate in 1973, public records show.
Outside the McDonald’s at 505 E. Colfax Ave. (Matt Geiger/BusinessDen)
The McDonald’s franchisee, Lauren Addy, said in a statement that she is investigating and that the safety of her customers is her “top priority.” About a week after that statement and numerous calls made to Addy by BusinessDen for further information, a security guard said that they’d cracked down on the market.
As of last week, signs were posted in the building discouraging people from soliciting. Music was playing inside and out. Another security guard said then that people have continued coming in to sell goods, but the guards now have the authority to stop it.
Addy owns several restaurants around the Front Range and purchased the Colfax location in December, previous owner Frankie Luther told BusinessDen.
Neighborhood retailers have complained for years about crime and shoplifting.
“These are professional people who are good at concealing what they’re doing,” said Pete Marczyk, owner of local grocer Marczyk’s Fine Foods with a location farther east down Colfax and one in Uptown.
“We’re in there stocking asparagus and cutting meat. We’re not scrutinizing every person who comes into our store.”
Two businesses across the street from McDonald’s, speaking on the condition of anonymity, said they have also been solicited to buy goods but turn down the sellers every time.
Theft and crime in the neighborhood have become so burdensome that Natural Grocers closed its store near the corner of Colfax Avenue and Pearl Street, a few blocks away, in October, despite having five years left on its lease. A few months later, a nearby apartment building on the other side of Colfax was condemned by the city after it fell into disrepair.
Marczyk said he doesn’t care where his products go after being stolen. He just wants it to stop altogether.
“That’s my family’s food, that’s my ability to pay my employees,” Marczyk said. “It’s unconscionable.”
The Denver Police department said through a spokesperson they were unaware of the black market inside the restaurant. Last year, around 100 crimes were reported within 100 feet from the McDonald’s, per city data.
That’s roughly one crime every three to four days.
“It doesn’t register as a problem because it’s an aggregation of $5 crimes, and so it just doesn’t hit the threshold for our legal system to kick in at a level that is meaningful,” Marczyk said.
“If they steal 40 bucks from you 50 times, sure, that’s a felony, but how can you prove it?”
