McDonald's may be the victim of its own success

When low prices are your hook, trying to stress quality can be a stretch. So far, consumers aren't buying that pitch.

By Jonathan Berr Jul 22, 2013 12:06PM
A McDonald's employee prepares an order at a McDonald's restaurant on April 19, 2011 in San Francisco, Calif. (© Justin Sullivan/Getty Images)McDonald's (MCD) has successfully managed to convince consumers that buying its food won't bust their budgets. Perhaps, this strategy has worked too well.

That's because efforts now to market the quality of its food as well its low price aren't going over so well, judging by the chain's recent string of mediocre results. Now, it needs some fresh ideas.

The House that Ronald built today reported second-quarter results that were, in short, a disappointment as was the company's forecast of flat sales for July and tough going for the year.

Under CEO Don Thompson, McDonald's has revamped its menu, cutting poor sellers such as the Angus burgers while adding new offerings such as McWrap chicken sandwiches and new variants of its Quarter Pounder.

But customers aren't excited by these moves. McDonald's comparable U.S. store sales -- sales at stores open for at least a year -- rose a scant 1%, while operating income was relatively flat. Shares of McDonald's traded down more than 2.5% in Monday morning trading.

No wonder, given Thompson's downbeat forecast for the chain, saying "the market remains challenging and economic uncertainty is pressuring consumer spending."

Although that's true, many McDonald's rivals such as Chipolte (CMG), which reported much better-than-expected results last week, are faring better. Wendy's (WEN) recently introduced Bacon Pretzel Cheeseburger got a rave review from Brand Eating, which called it the "front-runner for best new fast food product of 2013 for sure." It's been a while since anyone has been that excited about any McDonald's offering.

The other issue is service. McDonald's customer service has been virtually nonexistent for years. As a regular customer of McDonald's, I've noticed that the workers at the locations I frequent are acting friendlier and are taking extra steps to make sure that they get my order correct.

These changes are welcome, but McDonald's has a long way to go before its customer service reaches Chick-fil-A levels.

McDonald's isn't in danger of going out of business anytime soon. It just seems like the chain is running out of ideas.  

Jonathan Berr owns a small position in McDonald's. Follow him on Twitter @jdberr.

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45Comments
Jul 22, 2013 12:18PM
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Maybe they could actually start serving real food, and real hamburger, instead of all those chemicals?  I won't eat there.
Jul 24, 2013 9:38AM
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Look Mcdonalds is not the problem here,its people making bad choices thats the real issue. Treat Mcdonalds for what it is. They serve fast,cheap burgers and fries. If you dont like their food then dont eat there. If you eat there four times a week then complain that Mcdonalds is the reason for the obesity problem in america then you are a bit delusional. Mcdonalds serves a purpose just like all the rest, Wendys, Taco Bell, Burger KIng,and the list goes on and on, but for some reason we crucify Mcdonalds while secretly stuffing are faces with their delicous fries. I eat there maybe once or twice a month, I go to the gym weight train and do cardio four to five times a week,  Im in great shape and I dont blame Mcdonalds for all thats wrong in this country. Mcdonalds isnt holding a gun to anybodys head forcing them to eat at their stores, its all about choice,good or bad its all up to you. 

Jul 22, 2013 12:31PM
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I never eat there , nor do any of my family members . It's junk , designed for an early expiration from earth .
Jul 22, 2013 12:53PM
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McDonalds in my area does not try to even pretend to care about the customer.  Once I bought a deal from LivingSocial for 1O Big Macs.  I think it was $10 for 10 vouchers for a "free" Big Mac.  The manager at my local McD's refused to honor it correctly. Some locations just did not participate, but mine did.  He (the manager) said the voucher was for dollar off a Big Mac.  He refused to listen to me.  I contacted LivingSocial and McDonalds.  After about a week,  I finally was able to use them at the local McD's. When I approached the manager, hoping for an apology, all got was rudeness.  It is no wonder that the chain is hurting.  They literally have no idea how to offer quality service.  I have not been back to a McDonalds in months.
Jul 22, 2013 3:37PM
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I don't like the dried out precooked hamburgers or the crappy help. Last time i went there I spent over $7.00 for a lousy 1/4 pound meal. I much rather go someplace that cooks to order food.


Jul 22, 2013 12:53PM
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With so many choices that are better, why even comment on what MacDonalds does.  Does it matter any longer?
Jul 22, 2013 12:59PM
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every time I eat there, I think of the movie "Soilant Green".  
Jul 22, 2013 2:10PM
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I don't know what part of the country you are talking about, but here in the Boston area, I go to several different McDonalds and the service is great. It's actually getting to be funny, every time McDonalds is mentioned on the web the same people just have to say how bad the food is and relate how they never go there. If they never go there how do they know the food is bad  These are the same type of trolls who have to equate every subject on the web with politics.  They must have a boring life.
Jul 24, 2013 11:54AM
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If they served their food fresh off the grill instead of leaving it to soak in a greasy drawer and the microwaved, the food would taste better.  Wendy's does it and their burgers taste like burgers, not greasy hockey pucks.
Jul 22, 2013 1:38PM
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bring back the mc dlt, it was the best hamburger you ever made ronnie

Jul 24, 2013 12:06PM
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Mcdonalds has the worst tasting food of the burger chains. Who wants to eat a burger that doesn't taste like a burger. I just grill my own at home.
Jul 24, 2013 8:50AM
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I used to make the fries at Mc D's back in the late 60's.  Was all done by hand with fresh potatoes . That was then and they were great.  This is now and they aren't as great.  I rarely venture to Mc D's unless the grandson wants to go.  Only recent thing I liked was the egg Mc muffin but the corporate boys decided to double the price it used to be and I stopped going and ordering.  No small breakfast sandwich such as the mc muffin is worth just under 3 dollars..2.99.  When it's on special it's buy one get one free...bogo.  Even then they are making a profit. The rest of the menu pretty much speaks for itself.  Worthless, as many will attest to.
Jul 22, 2013 1:07PM
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McDonald's is attempting to reinvent itself with "healthy" alternatives.  McDonald's needs to go back to what it does best.  A few more commercial spots of the fries being taken out of a grease vat dripping oil would cure its current malaise.

 

McDonald's needs to leave the tofu, salad and beansprout market to others.  Get back to the sizzling burgers, eggs, cheese bacon, sauce, grease dripping fries, sugary treats and carbonated delights.

 

How about a new burger?  An avacado, cheddar, bacon  double burger. 

How about a new french fry size?  The collosal.

Jul 22, 2013 1:43PM
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great, they took the one item off the menu that I would call edible, the sirloin burgers.  I haven't eaten at this dump in over a year, and now have absolutely no reason to go back.  I never thought I'd say it, but Wendy's burgers are the very best of all fast food burgers.

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I only go there if I am desperate.  And I never use the drive through, I usually can't understand them,

between the Foreign accents and the crappy speakers., they get many orders wrong.. 

I find it easier to order take out orders inside the building.

 

I prefer Wendy's, I can get a burger, salad and a drink for 4 bucks.

I do miss Roy Rogers Restaurants, they disappeared many years ago around here.l

Jul 24, 2013 11:53PM
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Whenever I hear or read about McDonald's latest gimmick or "hook" to lure in customers . . . endless promotions with souvenir items giveaways, novelty food items, and loads of advertising . . . I'm always reminded about how well "In N' Out" burger places prosper without all the gimmickry that McDonald's foists upon the public.
In N' Out serves a favorable and simple burger for around two-dollars, with fresh-cut potato fries, with reasonably paid and well-schooled courteous employees, and the establishments are always kept clean and tidy . . . and those qualities attracts constant streams of customers.  In N' Out is a success story without the gimmickry and loads of advertising that McDonald's seems compelled to do.

In N' Out excels in the basics with running its fast-food establishments, something that McDonald's has forgotten about.
Jul 22, 2013 3:41PM
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I totally agree.  Too many chemicals are used in the making of their food here in the U.S., but not so much overseas.  My younger son is very sensitive to food chemicals like MSG and TBHQ which McDonald's uses here in the states.  I used to think there are healthy items there I can feel decent about, but no more.  Plus, it is cheaper to make a healthy, seasoned real chicken tender with sliced apples at home.  And I know it is not laced with unnecessary chemicals. 
Jul 24, 2013 4:38PM
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I do not eat at McDonalds.  The food is not good like it was in the 70's
Jul 24, 2013 9:08PM
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McDonalds suckcess is fffading away...sssloowly! As people are eating healthier, might I even say, ORGANIC, fast food is geeting hurt.  My children don't even eat that sh@t.
Jul 24, 2013 5:43PM
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I went to the local McDonalds yesterday and ordered a 10 piece chicken mcnuggets...it was $4.90.

I asked when the price went up and she didn't know. I asked how much a 20 piece was and she said $4.99......9cents more for 10 more pieces. Does this sound crazy to you?

 

Made 6 visits to McDonalds last week, and was made to wait for over 10 min...4 times....because

the item I ordered had to be prepared. Usually you are told this by the time you pay...giving you the option to change your order if you are in a hurry. I didn't find out until they had given me part of my order at the take out window....and that got cold, waiting on the balance of the order.

 

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