McDonald’s Corporation (MCD) wants to change its image. Once prided itself on how many customers it has served, McDonald’s now wants to focus on individuals. And to do that, MCD is giving customers more control of their food choices — calling it the Create Your Taste platform, which allows customers to build their own burgers.
After reporting a 4.6% decline in November same-store-sales, McDonald’s is looking for ways to boost traffic and grow shareholder value. MCD stock lost more than 2% in 2014, against gains of more than 11% for the S&P 500.
All told, MCD has had no answer to surging newcomers like Chipotle Mexican Grill, Inc. (CMG) and Panera Bread Co (PNRA), which have stolen its customers — at least, until now. Or so it thinks.
Following the brutal U.S. same-store sales report — which also revealed respective declines in Europe and in the APMEA regions (Asia Pacific, Middle East and Africa) of 2% and 4% year-over-year — MCD assured investors it would turn things around and become more relevant to today’s consumer.
But how much of this slight “rebranding,” which will include new packaging and new uniforms for workers, will help boost traffic?
Admittedly, these ideas can’t be any worse than what it already has. The status quo wasn’t working and MCD stock has gotten punished for it.
Still, one has to wonder how much will any of this matter? And how much of it is just window dressing?
It’s true consumers want more choices, especially those who have embraced healthier eating lifestyles and want the same for their children. (Last month, the company also added a healthier alternative to its kids’ menu, introducing Cuties Clementines as an option.)
But McDonald’s menu and a change in consumers’ eating habits is only part of what has hurt the company.
In December, for instance, the National Labor Relations Board filed complaints involving 78 charges against McDonald’s and several of its franchisees; they were being accused of violating worker rights. Not to mention, for most of 2014, McDonald’s was in the middle of a wage battle with many of its front-line workers, who were seeking higher pay to offset higher costs of living … not pretty uniforms.
In a video statement Wednesday, McDonald’s Chief Marketing Officer Deborah Wah said, “Today, we are working harder than ever to evolve with our customer. We’re on a journey to change the relationship and conversation.”
That’s all well and good. But that customer must first deal with a front-line employee — preferably one that is happy about his employment status.
McDonald’s deserve credit for at least trying to embrace and address some of its problems. Through its Our Food, Your Questions campaign, MCD is showing it is willing to address the many stigmas that are hurting its brand and its image, including the source of its meat, among other topics. The company says it has answered more than 20,000 questions so far.
Still, with its earnings expected to finish off more than 10% in the fiscal year, investors holding MCD stock still have plenty of questions. Not the least of which is, does MCD still have a bright future?
Maybe so, but that future rests in the hands of its workers. And until McDonald’s realizes this, I’m not betting that MCD will climb in the near-term.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
