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McDonald’s In Crisis …. Have They Run Out Of Gherkins?

McDonald’s in crisis: can it fight off the Five Guys threat?

“Last weekend, Steve Easterbrook, the new British chief executive of McDonald’s and lifelong fan of the less-than-glamorous Watford Football Club, celebrated as his team secured promotion back to the Premier League after an eight-year absence. “Incredible achievement. Great run-in under pressure. Faultless,” he tweeted before turning back to his own personal challenge: How to resurrect the world’s biggest burger chain.

This weekend, Easterbrook will be putting the final touches to a plan he will be hoping receives similar reviews. 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.”

And no, despite the title of the post McDonald’s haven’t run out of gherkins …. It seems though that the place is no longer “flavour of the moment”. There are a number of reasons speculated for this turn of events but in my (oh so humble and probably insignificant) opinion it boils down to two things:

1) “Me-too” businesses. This is when a new(ish) business model is copied by someone else. So in the case of McDonald’s the “me-too” businesses are Burger King and Wendy’s and so on, as in “me too, I can sell burgers”. The market can tolerate a few burger outlets and other indirect competition (in this case places like Subway for example) but there’s only so much they can compete with.

2) Nothing lasts forever. This is a pretty simple premise that many people seem to forget. EVEN the biggest of companies can go under. When I was at university one of the “top companies to work for” when leaving university which many people would aim for was Arthur Andersen, probably the biggest of the big when it comes to accountancy, management consultancy and professional services. Now gone, destroyed partly due to their part in the downfall of Enron (another big company that didn’t last forever). If you’d told us all a few years back Woolworths would go under then people wouldn’t have believed it, it seemed like they’d been around forever. As I say “nothing lasts forever.

The world of food seems a different place these days. Before McDonald’s came along in the United Kingdom we had fish and chip shops and errr some “cafes”. I remember there also used to be independent burger bars such as Pop’s Choice in Horsham and then in some places there were kebab shops plus Indian and Chinese takeaways (I don’t really consider these as McDonald’s “competition” though). Horsham had no burger/kebab places until about 1981/1982 for example, which is where I lived at the time. If we wanted any of that we had to go to Crawley and they only had one place I can recall.

Nowadays there’s a myriad of food options out there. The aforementioned fish and chips, burgers, fried chicken, kebabs, sandwiches, Thai, Chinese and food from all over the world. In all that time has McDonald’s really changed all that much? Not really, it still looks rather “1970s” to me and is a rather impersonal place, it doesn’t have any “character” or any “soul” as such. Now I know character can be falsified (think stupid crap on the walls in pubs and coffee shops) but at least they don’t all look quite so “identikit”. I think McDonald’s is past its expiry date, it needs to change, not just a little bit, it needs to do something more “new paradigm”, more obvious; and I don’t mean just changing the menu and offering salads nobody wants anyway.

Steve

 
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