Follow Up: McDonald’s Starts to Turn it Around

McDonald’s has been in a slow decline as consumer preferences shift towards fast and healthy foods as opposed to the fast food giant’s fast and greasy foods. For nearly two years, it had seen its stock fall; for the first quarter its sales dropped 2.3% quantifying the crashing guest traffic in all its major segments. Before getting into what they’re going to do, it’s crucial to first discuss the core issues they need to fix.

First, McDonald’s needs to repair the image of its food. Consumers around the world compare McDonald’s to an unhealthy, cheat day meal despite its salads and wraps. Clearly, introducing new menu items hasn’t worked to mitigate this issue, so new CEO Steve Easterbrook (replaced Don Thompson) will have some work to do, and it wont be easy—the level of competition is greater than it was back in ’02 when McD’s last had major problems. Today, McDonald’s needs to recapture the market control it lost to companies like Chipotle and Chick-fil-a.

So what are they going to do to turn things around? Though Easterbrook won’t release his plan until early May, analysts speculate that McDonald’s will need to iron out its confused brand: what is McDonald’s customer and what are they looking to buy? Secondly, McDonald’s will need to improve its supply chain to better communicate and coordinate with its suppliers and franchisees to improve how quickly it transitions products from testing to rollout. Lastly, it could better integrate technology in both back end organization and front end consumer payments.

Though analysts debate over the future of McDonald’s, they agree unanimously on one thing: Easterbrook is going to have a lot of work to do.

-- Joshua Sakhai