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MCD Image Overhaul – Can It Help McDonald’s Stock?

Fast-food chain planning to offer books in its Happy Meals


McDonald's NYSE:MCDMcDonald’s (MCD) can’t seem to catch a break.

MCD announced today that it will include paperback books for kids in its Happy Meals — something that in theory seems like a step in the right direction to fix its tarnished brand and get McDonald’s stock back on track.

MCD has been a common target for critics in recent years thanks to its food quality, unhealthy offerings and marketing toward children. And while McDonald’s stock held up for some time despite such complaints, MCD shares finished in the red in 2012 and have been a notable laggard so far in 2013.

And yet, most critics weren’t impressed with the fast-food giant’s latest offering, suggesting it’s still going to be an uphill battle to get McDonald’s stock back on track.

MCD Attempting a Turnaround

Management hasn’t been taking that McDonald’s stock underperformance lightly. Instead, MCD has debuted new offerings, new management and new health initiatives. A few examples:

  • MCD is only promoting and marketing water, milk and juice for its Happy Meals.
  • All marketing for Happy Meals will include a message about nutrition or well-being.
  • McDonald’s is offering side salads with value meals at no extra charge.
  • MCD recently hired its first chief digital officer and launched an electronic loyalty program.
  • The chain also debuted a pumpkin spice latte, chicken wings and other new menu items.

And now, MCD is offering the aforementioned limited-time children’s books. They will feature “Funky Farm” Happy Meal characters and focus on focus on nutrition, imagination and active play.

So far, though, the response has hardly been positive — and that’s hardly a good sign for folks hoping this will take MCD stock one step closer to a turnaround.

As Jesse Bragg, spokesman for corporate watchdog group Corporate Accountability, told USA Today: “It’s definitely more of the same. It’s just a way to get their brand in front of kids in a very subversive way.”

She also added that the books might make kids associate the McDonald’s brand with healthy eating.

Meanwhile, The Consumerist posted its own snarky response to the new initiative, with Chris Moran writing: “Even though there are already books available on this topic, McDonald’s chose to create its own books to help educate youngsters on the topic of healthy eating. This allows the company to tailor the message so that kids don’t get the wrong idea that maybe fast food isn’t the best thing for them.”

He added: “The first book is The Goat Who Ate Everything, which we had assumed was about a large-scale goat farm where farmers feed unnecessary antibiotics to the animals just to encourage muscle growth but end up causing a superbug that decimates the population. Alas, it’s apparently about a fat goat who learns to eat better.”

Still, while its easy to laugh at MCD’s many initiatives, that doesn’t necessarily mean the moves won’t help McDonald’s stock over time. A slightly healthier image and offerings could be enough to get consumers back into MCD restaurants, and get sales back in the black.

The first hint of whether the momentum is on the side of McDonald’s stock will come when the company reports earnings Oct. 21.

As of this writing, Alyssa Oursler was long MCD.

Article printed from InvestorPlace Media, http://investorplace.com/2013/10/mcd-image-overhaul-mcdonalds-stock/.

©2017 InvestorPlace Media, LLC