McDonalds is the largest fast-food chain on the planet, serving 68 million customers per day across 35,000 stores. But, after a sales slump that’s lasted for six consecutive quarters, we have to ask, are the golden arches starting to collapse? And if so, why?
Simply, the evidence speaks for itself. Major scandals in Asia causing massive drops in sales, a steady decline in popularity across home soil and the company remaining the only on the Dow Jones Industrial Average that’s been in the negative for the last 12 months, with stock value dropping another 10 percent in recent months.
Worrying figures for one of the most notable brand names in the world, but the fact remains that demand is fading, and this appears to be down to a number of reasons, primarily the disjunction of a previously unified market. Consumers previously content with cheap fast-food are now considering their options, increased interests in customisability, ingredient quality and overall physical well-being have given rise to trendy casual restaurants such as Chipotle and Chic-Fil-A.
McDonald’s can be considered a victim of half a century’s dominance. They’ve dominated the market for many years now, and while they’ve had competition from Burger King, KFC, Wendy’s in the US, as well as Subway over the last few years, they’ve never really been threatened as top dog. But due to what seems like a decade of bad publicity and lawsuits, the success of critical documentaries in raising awareness of the negative health aspects of a McDonald’s lifestyle (possibly causing the company wide refurbishment of stores) and a growing demand in the US for ‘fresher’ food at competitive prices, means that the fast-food giant is starting to sweat.
Consumers are simply not finding a reason to choose McDonalds. Newer brands are offering healthy alternatives to the double cheeseburger, allowing the more health conscious consumers an option, while joints such as In-n-out and Five Guys continue to provide arguably superior quality product and service, leaving the food giant between a rock and a hard place.
But what can Maccy D’s do to turn it’s fortunes back around? CEO Steve Easterbrook recently announced changes to be implemented to save costs, which involves restructuring corporate hierarchies and store placement, as a way of making the company a more efficient business model. But are these really the changes the company need? It seems that the critical eye is aimed in the wrong direction, and should be aimed at the food.
The simple fault that we can take as a reason for this is their failure to innovate a stagnated product. When was the last time a new product at McDonald’s made a real impact? And with the McDonald’s menu containing 147 items, their business strategy seems bloated and unmodernised. Customers seem to be pretty clear on their complaints, the poor quality of the product is what drives their interest away.
So again, we can be shown the importance of fluidity and innovation within a business, whether you are self-employed, or the largest fast-food provider in the world, listening to your customer base and evolving your business model based upon your target market is vital; no one can afford to stay still. What will be interesting to see now, if they innovate, is what direction they’ll go; or if they don’t, if they’ll survive.