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.

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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.

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