Is Ronald McDonald facing a layoff?

Group calls the clown a 'deep-fried Joe Camel' who is fueling childhood obesity nationwide.

By InvestorPlace Apr 2, 2010 10:00AM

mcdonalds mcdOne of the most recognizable corporate spokesmen of the last 40 years or so is Ronald McDonald, the “spokes-clown” for McDonald's (MCD) restaurants around the world. But if some health advocates have their way, Ronald will be getting a pink slip.

 

According to Corporate Accountability International, Ronald is feeding a "fast-food-industry childhood obesity crisis." Nearly 60% of Americans polled by the group believe that the fast-food industry is responsible for a growing "epidemic of childhood obesity and diet-related disease,"and marketing efforts to children that include Ronald McDonald are the biggest culprits.

Corporate Accountability International is calling the red-haired clown a "deep-fried Joe Camel for the 21st Century" and is sponsoring "Retire Ronald" events at several locations around the country.

 

So what are the chances that Ronald really is facing a layoff? Actually, pretty good.

 

First off, it appears there is finally political will to push for healthier habits in youngsters. Childhood obesity has been adopted by First Lady Michelle Obama as her pet project, drawing increased attention to a health problem that is ballooning. Fast food is not entirely responsible for these changes, but there is not much argument that it is a significant cause. Michelle Obama has already managed to gain some concessions from snack food giants like Coca Cola (KO), Pepsi (PEP) and Kraft (KFT), so it's not unreasonable to think MCD will fall in line.

 

Secondly, children’s meals aren’t exactly the bread and butter for McDonald’s so the corporate office of this $73 billion business may not put up a fight like big tobacco did. The company’s biggest bumps in the bottom line in the U.S. lately have come from the success of its Value Menu connecting with cost-conscious consumers and the rollout of McCafe coffees to appeal to java junkies.

 

And on a broader note, like most big companies on Wall Street, MCD is an increasingly global business that is focusing overseas for profits. McDonald's beat expectations with a 2.6% jump in its same-store sales for January -- however, a closer look shows that sales fell 0.7% in the U.S., and were offset by a brisk growth rate of 4.3% in Europe, Asia, the Middle East and Africa. In an already saturated U.S. marketplace, it’s not like Ronald is really moving the needle as a mascot for the global franchise.

There’s no denying that the introduction of Ronald was an advertising ploy directly for kids, coupled with the successful Happy Meal kids’ meals. If children lobby their parents to take them to a McDonald's store, they effectively become mini marketing machine in households across the country. But a media-savvy public and a renewed focus on health may mean Ronald is doing more harm than good for the McDonald’s corporate image. That affects the bottom line in some ways, so it may actually make good business sense to move on from this old mascot that debuted in 1963 with TV personality Willard Scott donning the costume for the first time.

Then again, it may not be fair to turn Ronald McDonald into a villain just because American children don’t have healthy eating habits. Changing the Happy Meal mascot may not mean much if kids don’t have good role models and parents don’t encourage them to stop watching TV and get outside and get some exercise. McDonald’s would be well within its rights to say that groups like Corporate Accountability International are overreacting.

 

The bottom line though is always the bottom line. If McDonald’s can spin a Ronald McDonald layoff into a great PR move that wins over consumers, you can bet that executives will tell the 57-year-old clown to turn in his oversized shoes and yellow jumpsuit faster than you can say “fast food.”

 

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