McDonald's fights to regain customers

The fast food chain tries to bounce back after a disappointing earnings report, while countering worker wage criticisms.

By Benzinga Jul 25, 2013 5:04PM
By Jim Probasco

Poor McDonald’s Corp. (MCD).


In addition to missing Wall Street’s earnings expectations on Monday, and along with the anticipation of lower sales the rest of the year as customers count their fast food pennies, the fast food giant faces more competition than ever, according to Chicago Business.


As McDonald’s CEO Don Thompson said in a statement, "Based on recent sales trends, our results for the remainder of the year are expected to remain challenged."

The challenge comes from smaller rivals such as The Wendy’s Co. (WEN) and Burger King Worldwide (BKW) -- as well as fast casual restaurants like Panera Bread (PNRA) and Chipotle Mexican Grill (CMG).


A sign outside the fast-food chain McDonaldAccording to Business Insider, McDonald’s has undertaken a three-step plan to regain market share. Expanding the popular breakfast menu is step one. McDonald’s recently added an Egg White Delight to it’s morning menu and has started offering Egg McMuffins and hash browns at night. There has also been discussion of an all-day breakfast menu.


Step two involves offering new premium menu items, like the recently rolled-out McWrap and Blueberry Pomegranate smoothie.


Step three, the company says involves remodeling about half of its restaurants, which will get a more contemporary look featuring muted colors and modern exteriors.


Meanwhile, even as the company tries to increase revenue and attract customers, it finds itself under fire from unions and activists, eager to raise the minimum wage, in part by complaining that companies like McDonald’s with its low wages and lack of benefits have many employees on Medicaid and other forms of government welfare.


In an exclusive interview on Bloomberg TV, CEO Thompson pointed out that 40% of McDonald’s executives started out as hourly employees. Thompson said, "There is no other institution I know of that can boast of those opportunities and success stories."


Thompson also said McDonald's entry-level workers always make more than minimum wage, in answer to criticism about wages and benefits for McDonald’s workers.


McDonald's was criticized early in July for a guide the company published to help employees manage their financial resources. Called the “Practical Money Skills Budget Journal,” the guide was mocked by the Huffington Post as being "full of ingenious ideas" such as "Get a second job!" and "Don't squander money on trifles like heat and health care!"


Shares of McDonald’s stock ended the day on Wednesday down $0.10 at $96.66 but regained $0.09 of that in after-hours trading.


At the time of this writing, Jim Probasco had no position in any mentioned securities.


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6Comments
Jul 25, 2013 5:40PM
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Thumbs up if the Big Mac isn't as big as it was 20 years ago
Jul 25, 2013 10:57PM
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Mr Thompson,

  I will try this one more time! I suspect you will pay no heed to this message but here goes again. I am (newly) sixty years old and bought my first McD in the early sixties. In a nutshell; I am absolutely tired of walking into one of your

stores and being confronted with an entire staff that can't (and doesn't want to) speak intelligible "ENGLISH". SIR! This ain't Mexico!!!!!!!!!! A chain you may have heard of..."In N Out Burger" has recently opened a store in my town (Grapevine,TX) that you can visit and not hear anything that is not "ENGLISH"! BTW- their starting wages are $10.50/Hr.

Jul 26, 2013 5:15AM
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At least you stand a chance at understanding some Spanish. Our local McD's are staffed by Chinese and Egyptians. 

 

At least the rotating foreign students are a thing of the past, never knew what language was next.  

 

We are not lucky enough to have "In N Out Burgers", but ironically they do speak English at the local Taco Bell!

Jul 25, 2013 7:41PM
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I keep wondering how in the hell people eat this trash. Cold food, bits and pieces of french fries. Just pure slop.
Jul 26, 2013 6:52AM
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wow this a company is just like burger king there customer service sucks. ive gone into mcdonalds bought a sausage cheese and hardly ever get to work and have the cheese on it, every bk ive go to the floor looks like they never clean the place and the bathroom are rank...the ceo needs to go buy a chicken sandwich and see there doing it. also I went to a mcd's the other day and the manager is sitting with his employ's at table eating dominos pizza and no one was behind the counter...im convince im not going back any more after writing all this

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