McDonald's US sales are down. Is it time for McDonald's to reinvent?(Read article summary)
Given that McDonald's US sales have been declining in 2014, McDonald's franchisees are wondering if the brand needs to reinvent itself. In a survey, some franchisees in the US say 'McDonald's is more and more like a convenience store.'
The surveys of McDonald’s franchisees conducted regularly by Janney Montgomery Scott analyst Mark Kalinowski usually produce gripes about corporate management’s handling of marketing, menu and internal communications. But the latest survey, released this week, also includes a few expressions of doubt about that brand itself that are unusual. Given that McDonald’s US sales were down 0.2 percent for 2013 and have been negative or flat each month in 2014 (and Janney predicts -2.6 percent US sales for June,), questioning whether the concept has lost its way is understandable.
Says one of the 27 US franchisees (representing 231 restaurants) interviewed for the survey, “It was time for this brand to reinvent itself a couple of years ago. We are now overdue. Who is it, exactly, that we want to be? I continually receive mixed signals from Oak Brook on this issue. On the one hand we are trying to simplify things yet on the other we are trying to see if we can fit more equipment for other products.” Another says, “Our best years are behind us.”
Adds another, “We’re the top restaurant in numbers, and people frequent us because we’re [convenient] and most of the time they receive a good experience. However there is not a compelling reason to visit us versus competitors. Having said that, we still serve the most customers because we’re considered cheap, rather than the best quality. We certainly have the best facility but we have to find a way to convince them that we offer the combination of service, quality, and cleanliness at the best value, not the cheapest.”
To be fair, some voices are positive about the brand and its prospects. Says one franchisee, “Good promotions and products in the pipeline. Economy and gas prices seem to lead to more staycations which should help sales.” Another adds, “McDonald’s future is strong. With the buying power of McDonald’s I would hate to be a competitor.”
But the overstuffed menu still is a focus of discontent from several of the operators surveyed. “We’ve introduced so many new products over the last few years it seems customers now only come in to try a new product,” complains one franchisee. “McDonald’s is becoming more and more like a convenience store due to the sheer number of products we sell. The quality is very basic and will never be good or great without drastic changes,” according to another. “Need to trim the menu and focus on our core business,” is another opinion.
One operator points to the recent Consumer Reports ratings that had McDonald’s at the bottom (although it should be noted it has been at the bottom in past rankings as well). “All the money spent on rebuilds and remodels got us nothing! It’s all about the menu. The recent Consumer Reports survey reflects this. Our competitors with simpler menus are doing just fine and run with far less labor.”