When you go to McDonald’s, why do you go? I posed that question to my colleagues this afternoon, after reading the turnaround plan the beleaguered company released this morning.
The answers were … well, read them for yourself, with the grammar and syntax cleaned up:
“When I go to McDonald’s, I go because everything else in the airport is closed. LOL.”
“There are enough better options that are still relatively cheap. Why would you go to McDonald’s?”
“I feel like McDonald’s’ main source of income at this point is school teams at away games.”
“Out in the middle of nowhere, in Nebraska, South Dakota, West Virginia, whatever, they all have Wi-Fi. It’s amazing.”
“I love McDonald’s, but I never go because I feel it’s frowned upon and I feel disgusting afterwards. I feel like millennials have a McDonald’s stigma.”
“I feel like I stopped going to McDonald’s the minute I moved to a place where McDonald’s wasn’t the only viable dining-out option.”
“Super-Size Me was a very effective film.”
“I ate at a McDonald’s in Paris on my honeymoon. I felt so ashamed of myself, but it was the only place with a bathroom/Wi-Fi in sight.”
“These days, why eat a burger that isn’t fantastic?”
There you have it. At least judging by the admittedly small and non-representative sample set of the people who were in my group chat as of 1:30 p.m., nobody really goes to McDonald’s, not in the way that they go to Chipotle, Popeyes, Shake Shack, In-N-Out, Potbelly’s, or even Taco Bell. It is food that people get out of convenience. When there are other, better options, the other, better options win out.
It is not just my colleagues who feel that way, though. Read one of the dozens of analyst reports about the Golden Arches or listen to its earnings calls, and you will hear tell of a company adrift in the post-post-recession era, incapable of drawing in a crowd like its slightly more expensive, much higher quality competitors. It seems clear when looking at the company’s revenue figures too. In the United States, by far the company’s biggest single market, same-store sales have declined for the past six quarters. “No business or brand has a divine right to succeed, and the reality is our recent performance has been poor,” Steve Easterbrook, the company’s newly installed chief executive officer, said today. The company needs to “urgently reset this business.”
Hence his turnaround plan, revealed this morning. A lot of it is back-of-the-house reshuffling, perhaps designed to keep investors happy while the company tries to improve its sales and image. McDonald’s will sell off some of the stores it owns, turning them into franchises. It will restructure its business, trimming its bureaucracy and allowing it to make and implement decisions faster.
Then, there’s the only lightly sketched part of the plan aimed at making customers happier and the food better. McDonald’s will try to “create more excitement around the brand” and improve its perception in the eyes of the burger-scoffing public. “Tastes are changing and we have to move with those,” Easterbrook said on a call with investors. To that end, the company recently introduced a line of sirloin burgers, one-third-pound patties that will retail for about $5 apiece. It has also promised to limit its use of antibiotics for its chickens.
But here’s the hard part for the Golden Arches: It is not at all clear that the way to beat its higher-priced, better-quality competitors is to join them. Some of the company’s past attempts to offer more upscale, compulsively edible items like the Chipotle burrito or the In-N-Out animal-style burger have worked, like its smoothies. But many other new items have failed. Take the 2013 introduction of the Mighty Wing. It was, by all accounts, pretty tasty. But customers rejected it as being a little too expensive compared to the rest of the menu, leaving McDonald’s with 10 million pounds of excess bird parts on hand. Or take the Angus Third Pounder, a bigger, nicer burger that McDonald’s introduced in 2009. It ended up dropping them from its menu as well.
It all goes back to that original question I asked my colleagues: Why go to McDonald’s? For many families, the answer is for a cheap, convenient meal when there aren’t a lot of other options around. But there are very few families who are going to drop in for a $5 burger, not while McD’s has a $1 burger on the menu and there is a Five Guys across the street.