McDonald’s is on the ropes. After two years of sales declines, I guess the board got tired of waiting around for CEO Don Thompson to get the world’s largest fast-food burger chain growing again. The 25-year veteran is out and Steve Easterbrook, formerly chief global brand officer, is the new head honcho under the golden arches.
Continue Reading Below
The question is, what can possibly be so hard about fixing a burger joint? It’s McDonald’s (NYSE:MCD), not SpaceX. Yes, it is a very big burger joint, but still. This isn’t rocket science.
There’s certainly been no shortage of startlingly obvious advice from the media, that’s for sure:
They say McDonalds is having a problem with Millennials. Well, who isn’t? When they figure that one out I sincerely hope they let the rest of us in on it.
I’ve also read the problem is competition from Shake Shack (NYSE:SHAK), Five Guys, In-and-Out and a host of others. Wow, really? Competition. Who knew? What did they think Burger King, Subway, KFC, and Pizza Hut were?
Some say Mickey D’s needs fresher ingredients like Chipotle (NYSE:CMG). Be serious. Who the heck goes to McDonald’s for healthy food? Besides, that’s just perception. It’s an easy fix with some creative marketing.
Pretty much everyone says the menu is bloated and needs to go on a diet. Well thank you Captain Obvious. Any other epiphanies feel free to send us an email at firstname.lastname@example.org.
Consumer Reports says their burgers suck. That may be a fair assessment but still, what’s new about that?
One columnist says the company is finally on track, getting back to basics, focusing on its core strengths and slimming down the oversized menu that’s clearly at the heart of its service, quality and cost troubles. While that rings true, then why fire Thompson?
I keep hearing that fast-casual is in and fast food is out. Fair enough, but I’m not sure how that adds anything valuable to the discussion. What’s the company supposed to do about that, throw in the towel and call it a day?
Look, the day the leadership team of a $90 billion company starts taking advice from people who write for peanuts, that’s a sure sign to dump the stock. Funny thing is, that’s probably what got McDonald’s into this mess to begin with.
As the public whipping boy for a generation of fast food critics that lay the nation’s obesity epidemic at the feet of the Fast Food Nation instead of those who simply eat too much, it’s not surprising that McDonald’s allowed itself to be whipsawed into adding healthier choices and changing recipes that customers loved just the way they were.
In many ways, this situation reminds me of how the federal government tried to fix an educational system that wasn’t broken. Now, after spending billions on education reform to help underperforming inner city students, the system really is broken.
It’s also reminiscent of how supposed environmental solutions inevitably end up doing more harm than good. In complex ecosystems – biological, educational or industrial – actions always have consequences that are hard to predict.
In every case you can see how people’s hearts were in the right place, but you know what they say, the road to hell is paved with good intentions. Clearly, McDonald’s fell victim to good intentions and the law of unintended consequences.
Nevertheless, a CEO who thinks he can supersize the menu and add dozens of new items and options without hurting quality, service, and profits has no business running a company of any size, if you ask me.
Look, I’m not going to fall into the same trap as the rest of the media. Having spent more decades than I care to think about in and around the corporate world, I’m sure McDonald’s knows it’s time to focus on doing what it does best and chuck the rest. And it certainly has the resources to determine which is which.
After all, this isn’t rocket science. If Satya Nadella can make Microsoft cool again, I’m sure Easterbrook can revive the Big Mac, spin some “fresh” and “natural” sound bites that phony foodies salivate over, and if he wants to get really creative, maybe infuse a little Jack Box-like edginess into old Ronald McDonald.