McD’s, Not Lovin’ It?

The times, they are achangin’. The McDonald’s ‘Golden Arches’ sign seems to dot  the landscape of many a town and city around the world.

For several years, with its limited-menu fast-food and somewhat lower prices, McD’s had been market leader, in its largest market, the US, and most countries. As market leader, there seems, curiously, to have been no need to cast critical looks at its market at questions such as:

  • What are McD’s responsibilities as ‘corporate citizen’?
  • Who are its competitors, how significant and why?
  • What are the customer needs, are they changing and how?

As the song goes, everything must change – but expressed more philosophically.

Yes, McDonald’s now responds, belatedly, to a reality that has been evolving, slowly, then apace. On that The Guardian has an interesting report, McDonald’s in crisis: can it fight off the Five Guys threat? Regarding its new CEO and the market fortunes, we read

This weekend, Easterbrook will be putting the final touches to a plan he will be hoping receives similar reviews [as his football team’s]. On Monday, Easterbrook will reveal his strategy to turn around the 60-year-old company which is rapidly losing customers. The Golden Arches are looking increasingly tarnished. After decades of expansion that saw McDonald’s march into China, Russia and expand around the world, the burger brand is no longer flavour of the month. A million people have turned their back on McDonald’s in 2014, and profits went with them. Last year McDonald’s’ annual net income dropped 15% to $4.7bn – making 2014 one of the worst years in the company’s history.

With regards to the necessity of continuing, rigorous market research that McD’s self-confidence had seemingly nullified,

Financial analysts and restaurant consultants reckon that McDonald’s main problem is that it has largely ignored the changing tastes and ideals of its core American customers – and thus backed itself into the stickiest of corners. Easterbrook will find it hard, they argue, to catch up with the new wave of hipper, rival fast-food chains such as Shake Shack, Panera Bread and Chipotle, while at the same time staying cheap and fast enough to satisfy its remaining loyal customers.

Clearly, millions of customers are not “lovin’ it”. (And not to overemphasise that ‘Supersizing’ matter, as also associated with the likes of KFC.)

Moreover, as if the wicket could not get any stickier for McD’s, comes another report, EU to investigate claims McDonald’s avoided $1bn in tax.

The European Union is investigating claims that McDonald’s avoided more than €1bn ($1.1bn) in tax by exploiting a controversial royalties loophole through Luxembourg.

The European Union competition commissioner Margrethe Vestager said on Tuesday that she was examining claims, made by trade unions, that McDonald’s paid just €16m of tax on royalties worth €3.7bn between 2009 and 2013.

Clearly, US$1b is no ‘small potatoes’, real or powdered. ‘You deserve a break today’, McD’s? Even if so, that big a break?

In the broader context, how interconnected is this grand financial world? Well, Jean-Claude Juncker had been the Prime Minister of that Grand Duchy of Luxembourg for several years before being ‘anointed’ to the Presidency of the European Union, one of whose officials leads the investigation.

Overall then, McD’s market strategy seems not to have been such a financial disaster. Then there is that little matter of minimum wages for its workers in the US.

Some opportunity for the ‘entrée’, or re-emphasis and promotion of cultural cuisine in other countries?

Advertisements

Tags: , , , , ,