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.

By Kim Peterson Sep 10, 2012 8:21PM
McDonald's (MCD) is stumbling this year -- shares are down 7% so far and sales are sluggish. The company plans to revive growth with new menu items, but maybe that's the last thing it should be doing, writes one investment firm.

"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

Sep 11, 2012 7:38PM
They want to bring in more customers? Start by making food that actually tastes good. I would rather go to Jack in the Box or Taco Bell than go to McD's ever again.
Sep 11, 2012 7:12PM

I don't like going to burger places except fast food.  The whole point is I'm either there for lunch and need something inexpensive and fast or it's to pick up a quick dinner on the way home with a kids meal.  No matter the quality (and some aren't as good as they're made out to be), driving somewhere for an overpriced burger isn't worth it.  If I want something better than fast food, I can save burgers in my fridge/freezer and cook them myself.  It costs less and just takes a little time to make - time that I'd waste driving and waiting for the food.


There's nothing wrong with going out every once in a while for something like this, but not on any kind of consistent basis.  Too much food for too much money.

Sep 11, 2012 7:07PM
W H you took the words right out of my mouth.  I used to eat at McD's at least one meal a day but the customer service is i the toilet and not all  but a lot of the restaurants are filthy and i  am way tired of standing in line waiting for my food for ten minutes.  The funny thing about it is all the experts wont read this in stead they will have a corporate meeting to try to figure it out. LOL  all i can say is CUSTOMER SERVICE,CUSTMER SERVICE, CUSTOMER SERVICE,  And that goes for ANY company that is serving the public.  NO CUSTOMERS NO BUSINESS PERIOD!!!!!
Sep 11, 2012 6:43PM
Sick of McDonalds dirty restaurants and poor customer service!!!  That is why I do not go there anymore! 
Sep 11, 2012 6:18PM

mcD's current cardboard, carbs & corn syrup line-up...  up against a decent burger from In & Out such as the Double Double with real fresh potato fries & chocolate milk shake???

Sep 11, 2012 6:02PM
kim petersn who wroe this mcdonalds have been making money for 50 or more years so why do we need these two ****s opinion
Sep 11, 2012 5:31PM
With a coupon my wife and I eat at McDonalds at under $12 and that's with 2 Angus burgers and a milkshake, plus fries, McChicken and large sweetened ice tea. For a single burger and double burger plus drinks and fries at Five Guys it's $24. Sure Five Guys is much better but it's also twice the price. I think that's pretty expensive. There are a lot of other places that I think $24 goes further at.
Sep 11, 2012 5:31PM
Burger King's dollar menu double cheeseburger for like $1.49  (not a dollar any more) I think they call it Value Menu now ...puts McDonalds to shame for their closest offering. Real onions, not reconstituted .. just a way better sandwich for a buck and a half..... 5 Guys is a great upscale (pricey but great food) choice too. Chick-fil-A has the best chicken sandwich in the fast food buisness bar none. 
Sep 11, 2012 5:28PM
I live in Honolulu and I go to the Keemuko store. They need to cut down on employees and cut back their menu by about 30%..too confusing.simplfication is the answer.
Sep 11, 2012 4:59PM

mcdonalds doesn't need to simplify it's menu, they just need to do something to get more people in. the competition is doing well because they are different.  5 guys makes better hamburgers. they are more expensive, but they are better. and they are better enough to justify a not too big difference in price.  I think mcdonalds needs to innovate. come up with something new - like taco bell did with their doritos taco.  try some new burgers with better toppings maybe.


and I'll bet if mcdonalds served their breakfast menu all day long, they'd do well with it. I know I'd eat there more often if I could get their breakfast menu for lunch.

Sep 11, 2012 4:50PM
McDonald's could also offer some genuine vegetarian meals and open to an entirely different market segment.
Sep 11, 2012 1:38PM
My momma's so fat, McDonalds has to change their sign every time she eats.

I would go to Five Guys a heck of a lot more often if they had a bigger menu.  I love the fries, but I don't dig the sandwiches...the veggie options stink! (I don't eat red meat.)  McDonald's doesn't have the good fries, but they have chicken...on and off the bun and in a salad.

Sep 11, 2012 12:49PM
You got to have crunchy pickles and onions on the mcrib just in case you hit some bone and cartlidge.
Sep 11, 2012 12:13PM

Mc D needs better food there McSteak was great then gone

the reason McRib does so good when it is avaible is that it tastes great the rest needs every thu=ing on it to cover the meat taste 

Sep 11, 2012 12:10PM
Exactly! You go to McD's because you want cheap, filling, and FAST food. The more they do this other stuff, the less fast they get.
Sep 11, 2012 11:19AM
Am so SICK of McD'  ,  or any other fast food!  
Sep 11, 2012 11:19AM
I've been going to McDonald's for 40 plus years, dumb down the menu?    It's about as dumb down as it gets?  Who are these people from Hedgeye, who dream up these ideas?  Are they really that stupid they need a dumb down menu at McDonald's?  Educated in the USA right!
Sep 11, 2012 10:56AM
Food "quality" and consistency has declined at MD.  The burgers don't look or taste like they should.
The stores also seem to have problems properly cooking "premium burgers" currently on the menu. When properly cooked, they, at least, look and taste more like the classic American burger.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. 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 Morningstar Inc.


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.

123 rated 1
266 rated 2
485 rated 3
660 rated 4
586 rated 5
652 rated 6
640 rated 7
504 rated 8
289 rated 9
159 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.