What's wrong with McDonald's?

After a stellar 2011, America's favorite fast food chain has struggled throughout 2012. What will 2013 bring?

By Benzinga Dec 20, 2012 11:55AM
A sign outside the fast food chain McDonaldBy Sam Mattera

Following a great 2011, McDonald's (MCD) has been one of the Dow's worst performers of 2012. Year-to-date, shares of McDonald's are down more than 9.7%.

The shares are off their recent lows, but remain well below the 52-week high of $102.22. A number of factors seem to be weighing on the fast food giant.

Most recently, on Wednesday, McDonald's was forced to respond to a report by China Central that chicken it sold in its Chinese stores may have been fed indiscriminate amounts of antibiotics and growth hormone.

On Monday, Reuters reported that McDonald's leadership was urging its franchisees to keep their stores open on Christmas Day. This is a break from the company's traditional policy of closing on major holidays.

In a company memo Reuters obtained, management noted that McDonald's stores that remained open on Christmas averaged sales of $5,500. Given that most restaurants are closed for the holiday, impressive Christmas sales seem intuitive given the lack of competition.

Is it a sign of desperation, or just a part of a greater business trend? Wal-Mart (WMT) drew the ire of some employees in November when it moved up the time it would open to 8 p.m. Thanksgiving night.

Analysts at Bank of America don't think openings could add much to the company's top lines, noting, "We do not view incremental openings on Thanksgiving this year as a primary factor behind a surprisingly good 2.5% U.S. same store sales increase for the month of November. Likewise, we are not anticipating that more Christmas restaurant openings this year will have much impact on December results."

The biggest issue with McDonald's is likely the company's exposure to Europe, which is significant. As Europe has struggled, McDonald's performance in the region has been weak. Yet, should the European economy begin to recover next year, that could create a tailwind helping to support shares of McDonald's in 2013.

Shares of McDonald's traded about flat on Thursday, at $89.72.

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62Comments
Dec 20, 2012 5:05PM
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Just admit that you are only a human being and no matter how confident you feel about yourself - you need to know that the human body cannot medically stand up to a McDonald's meal of disaster.
Dec 20, 2012 5:04PM
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I haven't eaten at McDonalds for years,....ever since I got a burger that gave me the worst heartburn of my life!  What was in that meat?  McDonalds, like many previously successful businesses strayed from the formula that made them successful in the first place. The old school managers built the business on strict rules for product and service that now apparently they have  let slip for sheer profit.  Like Wal Mart,   who also moved away from Sam Walton's business credo of selling goods at a fair price and made in the USA as much as possible.  Sam  offered  fair treatment of the employees as compared to other retailers with stock options and promoting from within..  Now both hire part time workers as cheaply as they can and dumped any extra benefits that would encourage the employees to work hard for the company.  Rotten from the top down. 
Dec 20, 2012 5:03PM
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If you are hungry and McDonald's seems like the only alternative -

tis' better not to eat at all and remain hungry than to dip into McTerrible...

 

Dec 20, 2012 5:03PM
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i use to work at mcd's and since i quit I have not been back all that people say is true. And thay dont care if you want to spend time with your family on the holidays. As long as thay make that all mighty dollar. you work long hours and get called in on days off or have to stay later than your shift. if your 2mins late thay bust you down to min wage. and you have to pay half price for food. and the mcd's I work for started the working on christmas 2 years ago. And you know where our mgr was    AT HOME WITH HER FAMILY ON ALL THE HOLIDAYS REAL FAIR HUH!!! DO NOT LET YOUR TEENAGERS WORK THIS COMPANY BAD MISTAKE!!!!!!!
Dec 20, 2012 4:59PM
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McDonald's has bad tasting food that you know is absolutely miserable for the human body.  You have to be strong going into a McDonald's mood to stand up to what it does to you.  And to think you pay for this kind of abuse.
Dec 20, 2012 4:54PM
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everyone runs to the movie theatres on thanksgiving and christmas day !!!! so why the big deal ?? if u truly have a beef then dont even go to the movies specially since the theatres treat the employees worse than any retailer on any holiday !!!!

Dec 20, 2012 4:47PM
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do they really need to spend all that money on AMBIANCE? Clean fresh bathrooms and dining area would help a lot. Now they all look the same and boring. At least they all used to look different. Stop hiring all those MBA's and start hiring common sense people. Your food would seem better. Sitting in an upscale dining room eating a .99 cent burger--RIDONKULIS!!!!!
Dec 20, 2012 4:46PM
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People are learning what junk food does to their bodies.  The American diet is the worse diet in the world.  People in third world countries have healthier arteries than Americans!
Dec 20, 2012 4:43PM
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food is bland and horrible now...The fries have no taste and are rubbery. no matter what milkshake you order it taste "fake" and is contaminated with the strawberry flavoring.Thats the best part of the McBarf experience. The service is the slowest and most incompetent in the industry. Asking for Ketchup gets you disgusted looks. They recently remodeled all the McBarfs in our area. HIDEOUS is the word now. They look like something the military would erect with the olive drab and white colors.
Dec 20, 2012 4:42PM
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You can bet that way more than half of the orders placed at McD's if filled incorrectly.  I was lured back in recently by a very tastey looking sandwich, the CBO, which stand for Cheddar Bacon Onion.  First.... it looked nothing, and I do mean nothing like the adds.  This pathetic sandwich was over priced and there was nothing on it.  They even forgot the bacon.  How does that happen.  As to being open on Christmas.  Consider me done.

Dec 20, 2012 4:41PM
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Maybe they should make a burger that tastes like hamburger!
Dec 20, 2012 4:37PM
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I never eat at McDonald's.  I can't stand the smell of the grease.
Dec 20, 2012 4:36PM
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The question should be, "What's right with Mc Donald's? " Mc D's got famous with them being consistent, even though it's always been garbage. Too many health Issues caused by poor food choices will eventually put an end to Mc D's, if they don't change to a  much healthier menu.
Dec 20, 2012 4:32PM
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There are simply too many average selections on the "menu". When McD's can't make a Big Mac properly as they seem to lately, they need to pair down the menu and get back to basics. HOT sandwiches and good customer service. Not hard, folks!
Dec 20, 2012 4:28PM
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I'll tell ya what happened. McDs decided to cheat their customers when it came time to cut back. Instead of cutting bonuses for fat exec's or cutting some of them altogether, they screwed with the dollar menu and raised prices. So, I knew then that I would never set foot in another McDs again and it seems others have also been similarly affected. YOU REAP WHAT YOU SOW!! And contrary to our worthless governments claims...you are NEVER too big to fail. You deserve to go out of business.
Dec 20, 2012 4:28PM
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I always find it amazing how, when I ever go through the McDonald drive-thru that about 85% they miss something in my order. I mean really? how hard is it?? I mean that's not even about training, it's common sense!
Dec 20, 2012 4:27PM
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21st Century Business Credo:

 

Screw the employee.

Screw the customer.

Profits Over Quality.

Pay As Little Taxes As Possible.

 

Return On Investment is No. 1. 

Dec 20, 2012 4:25PM
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ya callense , esa basura lesgusta para que se hacen..

 

Dec 20, 2012 3:48PM
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I've contacted McDonald's corporate office about poor service, inacurate orders, several orders that had one food type look like it was picked up off of the floor and placed in the container, no maple syrup in a pancake order, and the list can go on.

Corporate thanked me for the feedback and assured me that they would forward my comments to the local, offending, McDonalds.  Later they sent an email and asked if I was satisfied with the follow-up from the local store.  I replied that I had not heard from the local manager, at all.  That was the last communications from McDonalds corporate.  They are definately in a downward spiral!  They had a good run.  Time for them to go away.

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