After just completing a small project for McDonald’s, I gained some insight in how companies view their performance and what they do about it.
Sales Are Down
It has been widely reported that McDonald’s sales are down 4.6%. 2014 may be their worst financial performance in a decade, and the end of the longest run of U.S. restaurant sales growth for a single chain in history.
For McDonald’s this is catastrophic. (For most companies, especially after the experience of the Great Recession, a decrease of 4% or 5% would not seem very catastrophic.)
The bottom line is, sales are down. As you might expect, profits are down even further. Probably because they failed to recognize that, when sales decline, you have to adjust your overhead appropriately downward. Most companies are slow to react and McDonald’s is no exception.
Pull Out All the Stops
McDonald’s is pulling out all the stops in an effort to revive the company. Changing the menu, pulling the CEO, developing a new branding strategy, enhancing digital marketing and, of course, the obligatory corporate restructuring.
There is no mention of their customers in all of the press about the company. There is no mention of why customers choose McDonald’s in the first place.
Why are sales down? Why are customers choosing their competitors? Why is the largest single restaurant chain in the world having difficulty navigating the first significant downturn in thirty years?
What Happened to the Customers?
McDonald’s is changing so many things that, if the turnaround is successful, no one will know what truly worked. More likely, because they are flailing so many pieces of duct tape around, the turnaround will not be successful.
I wonder what customers think.