Should McDonald's simplify its menu?
The hamburger chain is struggling this year, overshadowed in the US by Five Guys and other chains with far more limited offerings.
"Simplifying the menu rather than expanding it would be one positive step in the right direction, as well as toning down the company's overall complex strategy," write the investors from Hedgeye.
Just look at who's winning the burger business right now. "Companies like Five Guys and Shake Shack are slowly creeping in and taking away share from MCD," Hedgeye writes.
Post continues below.
So McDonald's needs to be more like Five Guys? Very little chance of that happening. What we're instead seeing is a divergence of sorts in the fast-food business. Five Guys and Chipotle Mexican Grill (CMG) are making it big with quality ingredients that take time to prepare. The menus at both establishments are very simple, and people know that while there isn't much to choose from, what you get will taste very good.
The traditional fast-food industry, meanwhile, is scrambling to find new, exciting menu options to bring people back. The strategy has worked very well for Taco Bell, which became the turnaround story of the year largely because of its Doritos Locos Taco.
McDonald's hasn't had one of these lightning strikes in a while; the last gimmick that struck gold was its McRib sandwich. It needs another hit, something to stop the people driving by on their way to Five Guys.
Burger King (BKW) is looking for a new phenomenon as well, but as beef prices hit sky-high levels this year the chain began trying to sell people on chicken. New items coming this fall include an Italian basil chicken sandwich, popcorn chicken, a breakfast burrito and a raspberry smoothie -- none of which sound all that exciting.
So would a simpler menu help McDonald's? Only if the company used those cost savings to radically improve taste and quality. But that would mean dramatic changes to everything from ingredient sourcing to distribution methods to final preparation. And some customers would certainly revolt against systemic change on such a grand scale -- and the price increases that would undoubtedly follow.
The smarter path for McDonald's is to focus on healthier foods. It's emphasizing menu items that are fewer than 400 calories -- a nice tie-in to the Olympic games and a logical reaction to soaring beef prices. It needs to capture those families who are trading down from casual restaurants, and selling itself as a healthier option is key.
More from Top Stocks
- GM loses big bucks on each Chevy Volt
- JCPenney to resume free kids' haircuts
- Investors don't know what to make of Greece
| Tags: | BKWCMGKim PetersonMCD |
MORE ON MSN MONEY
VIDEO ON MSN MONEY
McDonalds needs to go back to it's roots. Enough already with the "exciting new items". All in all, it is much too confusing to try and eat at McDonalds. Even their physical menu is too hard to understand and doesn't list just food .... they are always trying to shove a combo down your throat. I often pass them up simply because it shouldn't be so hard to order some lunch. And, even a lot of their employees are confused by the confusing, over crowded and limited menu and they just stand there trying to read that awful marquee menu.
I honestly think their sales would increase if the quality was better, and more consistent from restaurant to restaurant. I have 3 Mickey Dee's locally that are excellent...the food is always fresh no matter what you order. The other several dozen are hit or (mostly) miss. What's the point in having a chain of restaurants if the food varies wildly from place to place?
They also need to do away with the entire "combo meal" concept. It worked for awhile but then they started pushing the dollar menu, and a lot of people started to realize they didn't really need to pay $1.75 for a fountain soda that is half ice. Stick with what works. An a la carte menu is fine.
there is something very unappealing about gambling, when going to mcd for food it's alway a gamble, was the food cooked yesterday and kept in a "warmer" until you get there, was it cooked this morning, and then kept in the "warmer", or if you were really lucky, it might actually have been cooked fresh.
room temperature food that was cooked hours ago, is becoming a trademark of the mcd brand, no wonder the sales are down.
The quality of the larger burgers is just not very good. The Quarter Pounder has very foamy texture beef. More often than not, I just get two hamburgers rather than one bigger burger mostly because I don't care for the texture of the larger burger patties. Even the Angus patty isn't anything to write home about. Perhaps if the burger patties tasted like they actually had seasoning on them, it might be better but most of the time, the burgers seem like pink slime is the main ingredient.....nothing you would recognize as actual hamburger.
Bring back a regular shake, and not something put in a plastic container with whipped cream and stuff. The rest of the new drinks are just big old sugar bombs and not anything I want to drink with a meal.
The menu boards have gotten to the point that they are impossible to look at and quickly order, which means I go for the same old tried and true. The salads are unimpressive. The chicken sandwiches have no flavor. The filet-o-fish is still good although it seems smaller than it once was.
Breakfast is still the best meal they have at this point. Nothing beats an Egg McMuffin.
Maybe one place to start would be some less annoying commercials. In their recent TV ad's, they are saying "you're smart". Basically just because you ordered some lousy crap off their menu. What a 'low bar' to set.
I really miss the old days of McDonald's. When they had a respectable operation.
The one thing I enjoy about McD is their breakfast menu, but it has gotten out of hand price-wise. Also, several years ago I read that McD was going to serve breakfast all day, but have not heard any more about that.
I agree, too many item on the menu Just concentrate on less items w/better quality. When I do go, I usually get one of the extra value meals ($3,$4) and get bottled water as the drink. Otherwise te price rivals a sit down restaurant. Also, ther fries are doused with salt that make them almost inedible.
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
STOCK SCOUTER
StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.
128 | 268 | 471 | 585 | 652 | 595 | 673 | 422 | 262 | 141 |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |