Americans are abandoning McDonald’s.
The fast food giant’s domestic same-store sales plunged 3.3% in the third quarter, continuing a downward slide that began at the start of the year.
“By all measures our performance fell short of our expectations,” McDonald’s President and CEO Don Thompson said in statement. “We recognise that we must demonstrate to our customers and the entire McDonald’s system that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business.”
The US, where the company has more than 14,000 locations, is McDonald’s most important market.
Here’s why it’s slipping domestically.
1. McDonald’s is facing a growing perception problem in the US. In response, the company launched a massive marketing campaign last week to answer customers’ questions about how its food is sourced, processed and cooked.
The campaign might help the brand in the long-term. But so far, it appears to have only ignited a backlash.
McDonald’s Facebook page has been inundated with thousands of negative comments in the last week regarding its food. Many have accused the company of using “pink slime” and even human DNA in its hamburger meat. Others have criticised McDonald’s for marketing unhealthy food to kids.
Many of the accusations are untrue, but they provide clues into the gravity of McDonald’s public perception crisis.
2. The company’s complicated menu has been slowing down service.
The wait at McDonald’s drive-thrus is the longest in at least 15 years, according to a study by QSR Magazine. At 189.5 seconds, its also nine seconds longer than the industry average.
“Our menu is a disaster for both employees and the customer. It has killed our speed of service,” a McDonald’s franchisee wrote in response to a survey by financial services firm Janney Capital Markets.
McDonald’s Chief Operating Officer Tim Fenton admitted in January that the company “overcomplicated” the menu “with too many new products, too fast” and “didn’t give restaurants an opportunity to breathe.”
But according to franchisees, the company still hasn’t simplified the menu.
“All talk, no action,” one franchisee wrote in response to another Janney Capital Markets’ survey. “They continue to add more items (and admittedly will add more) even though they talk about reducing the menu. Top management is clueless as to what goes on in the stores.”
3. The company has tried to offset falling sales by slowly raising prices, which is driving away cash-strapped customers.
The company said its prices increased 3% through the end of June compared with the previous year, according to a Bloomberg report.
Even McDonald’s cheapest menu items are getting more expensive. The company expanded its dollar menu last year to include items that cost more than $US1, and it changed the name of the menu to the “Dollar Menu and More.”
A Double Quarter Pounder with cheese, fries, and a drink now totals about $US7.50 at some Chicago locations, Bloomberg reports.
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