Total revenue sank 11 percent to reach $5.96 billion in the quarter to March 31, and net income plunged 32.6 percent to $812 million. With 36,000 outlets in more than 100 countries, McDonald's has been feeling the pressure from its decreasing customer traffic. They attribute the drop to a range of difficulties including changing consumer tastes and flexible rivals with healthier menus.
President and CEO Steve Easterbrook said the company is working to resolve the challenges, including closing underperforming restaurants and simplifying menus.
"McDonald's management team is keenly focused on acting more quickly to better address today's consumer needs, expectations and the competitive marketplace," he said in a statement. "We are developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan on May 4, 2015."
As part of their follow-the-leader approach, Easterbrook has announced that with the chain now selling more chicken than burgers, it will stop serving chicken raised on antibiotics that are important to human health as worries grow over resistance to crucial drugs. They also announced they would increase wages for 90,000 employees in company-owned restaurants in the U.S. and offer them paid time off.
One could view both of these changes as a marketing ploy rather than genuine concern for customers' and employees' well-being given the fact that these issues are being addressed in the aftermath of plummeting sales dating back to October 2014. It seems that the company's corporate responsibility is directly tied to their pocketbook rather than their leadership and concern for those who fuel their empire.
McDonald's losing ground to Chipotle
The irony in this latest development is that McDonald's is falling behind its competitors, including one that they previously had a stake in. Chipotle, which McDonald's had up to 90 percent ownership of in 2005 and then divested in 2006, is on fire. While McDonald's was announcing a 30 percent plunge in third-quarter income and declining revenue in 2014, Chipotle reported a 31 percent increase in revenue and a 57 percent rise in net income in the same period.Chairman, Founder, and co-CEO of Chipotle, Steve Ells, cited "the way we source, prepare, and serve our food" as a major contributor to their increasing popularity. In 2003, they made a statement that they were taking tangible steps to become GMO-free and were moving towards serving 100 percent grass-fed beef worldwide, which certainly puts some teeth behind that statement. Although supply shortages of this type of beef in the U.S. could put a crimp in the sustainability of their offerings, it does represent a move in the right direction.
Meanwhile, McDonald's intends to officially announce antibiotic-free chicken in the future and is using Canada to introduce its verified sustainable beef venture some time in 2015. This means that they plan to blend the conventional stuff into the sustainably-sourced beef and gradually increase the percentage over time. As it continues to slowly introduce offerings that are being gobbled up by healthier fast food chains like Chipotle, McDonald's might continue to be a victim of decreasing sales as the behemoth struggles to keep pace and stay relevant.
Only time will tell how well McDonald's handles the current situation, but as they continue to slowly figure it out, expect other fast food chains to smell blood (grass-fed, of course) and move quickly in order to put a choke hold on the champ.
Sources:
http://news.yahoo.com
http://www.bloomberg.com
http://www.foodrenegade.com
http://www.marketwatch.com
http://www.huffingtonpost.com
http://www.greenbiz.com
2 comments:
Your food taste's like crap! Pink Slime? Really? You may wanna start there. Chicken Nuggets? They don't even taste like Chicken. Chick Fillet chicken actually taste and looks like chicken. Go talk to them.
Want to know the real reason McD is failing? Have you gone in there for a fast breakfast lately? That don't happen!
If you go inside, take a tent with you and a sleeping bag. You will wait in line til your legs fall off, then place the order, then wait til the nubs get worn down to a bump before your order is ready all the while the hash brown, that has been sitting there on the tray since you first ordered it has become cold waiting on the pancakes.
The other times of the day are just as bad.
Like at lunch. The order taker takes the order, rings it up, then makes change.
Then this same person, looks at the screen, sees an order of fries. Goes and gets it. Looks again. . . oh, there is another order of fries. Goes and gets that one. Looks again, Theres a BM. Looks again, oh, there's another BM.
Oh they need drink cups. walks away. . . turns around and comes back and looks again. . . what size and how many cups? Oh two mediums. Gets them out and on the tray.
You think I am kidding! This is just how it is!
When you place your order and the person rings it up, put your seat belt on! STICKER SHOCK!
I can go down the street to the diner, get breakfast just about as fast, MUCH better quality, and I got table side service.
For about the same money.
I remember when I was in High School, I worked at a fast food restaurant. We had a drive-thru and dining room. An example:
Person drives up, places their order. It is called out over the speaker (no confusing, small print screens back then). Those in the stations make the food (EVERYTHING was made to order. Burger patties, fries and dogs were cooked and ready but everything else was to order). The person pulls to the window. The windows person takes their money and makes change. Then the drinks were made and ready and were handed out, then the order showed up and was handed out and the customer pulls away. Even during lunch rush when the drive-thru was a steady stream, the rule was 2 minutes thirty seconds from order placement to drive away.
Two at the counter, one at the drive through, one at fries one at the dog station and one at the burger station and a runner between them. One drink maker and fry runner front and one each at drive-thru. 11 People was the whole crew. . . for LUNCH rush. Slower times, less people but the 2:30 rule stood. Faster if possible but they had better not sit there any longer than that even if there is a line. The dining room gets picked up during the slow times at lunch and a good cleaning after lunch rush was over.
Go into McD and there are people falling over each other no one has a job to do, everyone is trying to do every job, there are 6 managers for every two employees and the thing is utter chaos.
Why is McD failing? They lost the fast from fast food. Simple as that, oh, and also they are pricing themselves right out of the game.
. . .I'll step off my box now. . .
DS
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