Unhappy Meal: The Problem with McDonald’s

 

I recently had the chance to hear from the Senior Director, Supply Chain Management, Quality Systems for McDonald’s. I include the whole title because I’m a sadist, and also because it perfectly captures what’s wrong with the home of the unhappy meal. Unhappy because McDonald’s sales are tanking, dropping for three years in a row, including a 2 percent drop in US sales last quarter.

There are problems in Ronald McDonald land, and a job title that arcane is a perfect example of a bureaucratic corporation that is unlikely to turn things around. If you can’t get your job title in a tweet, it’s probably going to be hard for both you and everybody else to know just exactly what it is you do.

The director is convinced that McDonald’s is struggling because they were slow to respond to shifts in consumer demand. According to him, McDonald’s was tardy in listening to the well organized social media demands for sustainable, non-GMO, antibiotic-free food, and the banishment of any other technology that offends those who long for a return to peasant farming.

Although no business can ignore a consumer groundswell, McDonald’s ain’t never gonna be one of the cool kids. Or, as I rather inartfully put it when he took questions: “Your best-selling item is an unidentifiable chicken part rolled in flour and deep fat fried. Your customers are not on the cutting edge of the food movement. The last time I went to a McDonald’s, I couldn’t get anybody to take my order and my feet stuck to the floor. Mop the floors and improve service, and you might succeed!”

He disagreed, of course, and referred to any number of books and articles that described the changing consumer, a consumer who won’t be satisfied with anything less than a memoir from every animal that contributes to the menu.

Well, there is no doubt that the food market is changing, and that agricultural production will have to change to meet new demands. But there are all kinds of markets for all kinds of products. McDonald’s customers want fast, cheap, and tasty. They don’t have the budget or the time for anything else. There is nothing wrong with satisfying that market niche, and McDonald’s should know who they are rather than chasing the latest nostrum from Dr. Oz.

When our three kids were small and every extra dollar was invested in our business, McDonald’s provided a place where we could feed the thundering herd in a hurry, and where we wouldn’t be asked to leave because the kids were organizing a good-natured riot. Now that the kids are gone and the wallet fatter, those things aren’t quite as important. I stopped for a cup of coffee at McDonald’s after my time with the Director of All Things Trendy. The bathroom was filthy and 14 people were in line. I left.

Oh, and I think “Head Buyer” or “Director of Purchasing” is quite enough title for the guy in charge of ground beef and hamburger buns.

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  1. Thomas Stack Member
    Thomas Stack
    @ThomasStack

    Carl’s Jr. is directing it’s marketing efforts towards its core demographic with its very untrendy menu and doing great. MacDonalds should take notice.

    • #31
  2. Aaron Miller Inactive
    Aaron Miller
    @AaronMiller

    In free markets as in wilderness, a healthy environment relies upon a cycle of life and death. The bigger corporations get, the dumber they get.

    I like McDonald’s for the reasons you cite — cheap, flavorful, fun (Happy Meals and play spaces for kids). But I would happily watch the brand be kneecapped by some other purveyor of simple and tasty fried foods.

    It’s too bad President Obama’s union pals got to them first. Any updates on the future of franchising?

    • #32
  3. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Also, and I’ve mentioned it before elsewhere, the beef at US McDonalds outlets (arguably) isn’t nearly as good as the beef at other countries’ McDonalds.

    A simple upgrade in the quality of the beef used in the Big Macs and Quarter Pounders could mitigate the need to come up with new ideas for specialty sandwiches every month. A little less fat (just a little, I’m not talking about a return to the McLean here!) and a little more seasoning (basic stuff like salt & pepper) in the patties would go a long way.

    Just look at how well Dominos has done since they upgraded their basic recipes for sauce and dough.

    • #33
  4. John Penfold Member
    John Penfold
    @IWalton

    How are other fast food franchises doing?  How about corporate chains like Olive Garden and Red Lobster?   When you’re driving  across the country you have to eat in these places, but I don’t eat  in any of them when I have a choice.  Is it possible that Americans are ready for good food?  Many years ago, before Starbucks, I told a senior manager of the  Colombian Coffee Federation,  that Americans were ready for the coffee bars that were opening in Bogota, then it was Oma, now Juan Valdez which are better have entered the market.  We were ready for good coffee it was just a matter of doing it, they didn’t.  Is it impossible to present good food in a chain at a reasonable price?   How much of their problem comes from government regulation?

    • #34
  5. Bishop Wash Member
    Bishop Wash
    @BishopWash

    She:I’ve never been much of a fan since they stopped frying their fries in what was probably a mixture of used motor oil and lard many years ago, and went ‘healthy.’ Not nearly as good. And whoever made the decision to BAKE the apple pies was a dunderhead too.

    I didn’t know that they had switched to baked pies.  However, this weekend I had a short lunch break and grabbed some McDonalds. A sign in the drive thru proudly proclaimed that fried pies are back and to try the peach pie, available for a limited time. This was in So Cal, but is probably a nation-wide change.

    • #35
  6. SPare Member
    SPare
    @SPare

    The interesting thing is that up here in Canada, McD’s is actually doing pretty well.  They did a major change in their coffee business, to compete head to head against Starbucks and Tim Horton’s (a national institution), and they’ve been capturing share at a pretty impressive rate.  From what I understand, such a thing will be very difficult to replicate in the US because the change required a significant amount of capital investment in new machinery to brew the coffee (plus, make those nancy boy italian coffee drinks).  Where the corporate office was able to force the change in Canada, the sheer scale of the endeavour in America would be prohibitive, not least because some of their franchisees are major corporations in their own right.

    They’ve also been investing heavily in capital improvements to their stores- just about all of them have been re-done within the last 5 years,  which means that the issues with sticky floors just don’t happen to the same degree.  I can state, however, that it contributes to Misthiocracy’s complaint: they appear to have shrunk the size of the area where you order the stuff.

    As for the healthy stuff: it does sell, just not as much as the hype from advertising would suggest.  From what I am led to understand, the point of that stuff isn’t to replace burger revenue, it’s that it’s additive: salads have a low rate of cannibalization… as it were.

    • #36
  7. MarciN Member
    MarciN
    @MarciN

    My favorite company right now in terms of consistent quality and excellent customer service is King Arthur Flour. It has been a wonderful sight to see this company mature over the past twenty years.

    About ten years ago, it became an employee-owned company.

    I think that is the way of the corporate future.

    No more “We’re closing in an hour–please get out of here” attitude toward the customers. Everyone gains so everyone works hard.

    It’s a promising success story.

    • #37
  8. Bob L Member
    Bob L
    @

    MarciN:My favorite company right now in terms of consistent quality and excellent customer service is King Arthur Flour. It has been a wonderful sight to see this company mature over the past twenty years.

    About ten years ago, it became an employee-owned company.

    I think that is the way of the corporate future.

    No more “We’re closing in an hour–please get out of here” attitude toward the customers. Everyone gains so everyone works hard.

    It’s a promising success story.

    I love the concept of ESOPs (employee stock ownership plans).  All employees have incentive to work hard and share in the profits.  It would also be a union-killer as workers can’t collectively bargain with ownership (themselves).

    The GOP should seriously consider finding ways to encourage these arrangements.

    • #38
  9. gts109 Inactive
    gts109
    @gts109

    McDonalds stinks. We stopped into one on Maryland’s eastern shore recently. The ceiling was literally falling in, flies were everywhere on one side of the restaurant, and the bathrooms were unclean. There was no real wait in line, and the employees seemed nice enough, but none was terribly focused on her job. That’s certainly an improvement over the outright hostility some McDs employees share with the customer.

    The food was the same as it’s always been. Which is fine by me. But, the ads (including ones that were visible from my seat) have to pretend like the quarter pounder I was eating (I had ordered the two cheeseburger meal, but didn’t receive it) is juicer than the old version. It wasn’t. It was the exact, same sort of dry McDs hamburger that we all know and like. McDonalds should stop pretending to be Starbucks or Shake Shack, and focus on making the delivery of our subpar food as quick, clean, and friendly as possible.

    • #39
  10. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Thomas Stack:Carl’s Jr. is directing it’s marketing efforts towards its core demographic with its very untrendy menu and doing great. MacDonalds should take notice.

    So, the argument is that McDonalds should switch from a mass market to a niche market?

    Sounds like a recipe for massive downsizing.

    • #40
  11. MarciN Member
    MarciN
    @MarciN

    Bob L: I love the concept of ESOPs (employee stock ownership plans).  All employees have incentive to work hard and share in the profits.  It would also be a union-killer as workers can’t collectively bargain with ownership (themselves). The GOP should seriously consider finding ways to encourage these arrangements.

    I agree. The former CEO of King Arthur Flour (KAF) Steve Voigt has devoted his post-CEO life to helping other companies pursue this type of corporate organization.

    KAF is a B corporation (ESOP) now, but it took Voigt ten years to accomplish.

    Here is a great article about B corporations and King Arthur Flour.

    I admire this company very much.

    • #41
  12. Bob L Member
    Bob L
    @

    Misthiocracy:

    Thomas Stack:Carl’s Jr. is directing it’s marketing efforts towards its core demographic with its very untrendy menu and doing great. MacDonalds should take notice.

    So, the argument is that McDonalds should switch from a mass market to a niche market?

    Sounds like a recipe for massive downsizing.

    I think he means use boobs to sell giant cheeseburgers to young men.

    • #42
  13. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Bob L:

    Misthiocracy:

    Thomas Stack:Carl’s Jr. is directing it’s marketing efforts towards its core demographic with its very untrendy menu and doing great. MacDonalds should take notice.

    So, the argument is that McDonalds should switch from a mass market to a niche market?

    Sounds like a recipe for massive downsizing.

    I think he means use boobs to sell giant cheeseburgers to young men.

    Mmm… Cheeseboobers.

    • #43
  14. Kevin Creighton Contributor
    Kevin Creighton
    @KevinCreighton

    Misthiocracy: My problem with McDonalds is increasingly that they keep falling behind on the “fast” part of “fast food”.

    We were “blessed” to have one of their new style stores open up in my area a few years ago, ahead of everyone else. It used to be I’d get the drinks for my family ahead of the order, load them up and then wait for the rest of the order. In the new store, the drink cups came with the order and there was NO WAY they were giving them up before hand. That means 2-3 minutes of added time in the restaurant for no perceived reason.

    Now that my sons are too big for the playland, we’re eating at Wendy’s (because there’s no InNOut’s on the East Coast) if we want a burger. Same time to get our food, but better food when it gets there. McDonalds isn’t going to compete with Wendy’s with a few speciality burgers, but they can compete with them if their service is better than Wedny’s.

    • #44
  15. Pelayo Inactive
    Pelayo
    @Pelayo

    blank generation member:What percentage of McD’s business is done via drive-in vs. counter service? My experience over the years has been the counter servicer is not good (I would say “sucks”, but that is not in the Ricochet style guide, oops), but the driving is OK.

    Other places like In-N-Out take the order quick, but you wait.

    A Taco Bell bean burrito is quick to order and make. No time to go to the facilities I guess.

    Sorry to disagree.  I cannot count how many times the drive-thru staff has messed up my order and I have driven away without noticing.

    • #45
  16. Pelayo Inactive
    Pelayo
    @Pelayo

    I find the recent attacks on GMOs to be short-sighted.  If we eliminated GMOs completely, farmers would have to increase the number of acres being farmed by a large percentage.  The same Liberal Environmentalists who want us to avoid GMOs would then be complaining about all the trees we are cutting down to increase available farm land.

    I agree with the author’s opinion that McDonald’s should stick to its niche (cheap and fast) and not try to become something else.  They risk failing to become Chipotle and alienating their existing customers which results in a complete failure.

    • #46
  17. Bishop Wash Member
    Bishop Wash
    @BishopWash

    Pelayo:

    blank generation member:What percentage of McD’s business is done via drive-in vs. counter service? My experience over the years has been the counter servicer is not good (I would say “sucks”, but that is not in the Ricochet style guide, oops), but the driving is OK.

    Other places like In-N-Out take the order quick, but you wait.

    A Taco Bell bean burrito is quick to order and make. No time to go to the facilities I guess.

    Sorry to disagree. I cannot count how many times the drive-thru staff has messed up my order and I have driven away without noticing.

    Leo Getz from the Lethal Weapon franchise has a not CoC friendly explanation for that. I think it was in the second movie. “They [CoC] you at the drive-thru, okay?”

    • #47
  18. Frozen Chosen Inactive
    Frozen Chosen
    @FrozenChosen

    McDonalds has the same problem every other company does – they are staffed by lazy millennials who couldn’t care less about working hard and providing good customer service.

    Service has been declining across all industries in this country for many years for the same reason we elected a lazy socialist to the presidency not once but twice – our populace has become increasingly ignorant and lazy, which is due to the disintegration of the family and our horrible public schools.

    And while I’m at it, GET OFF MY LAWN!

    • #48
  19. Pilli Inactive
    Pilli
    @Pilli

    I worked at a McD’s franchise during the time period when the commercial mentioned in #7 above was airing.  I can tell you, we worked hard to match the expectations it generated.

    As a former 1970’s McD. employee, I can tell you what is wrong with them now:

    1)  Store managers are not well trained in management.  They don’t know how to run their stores and they don’t know how to train their employees.  I doubt they are on any kind of incentive program otherwise they would do better.
    2)  McD. has listened to people tell them their food needs to be more “nutritious” and less fattening.  The fries used to be cooked in an formula of lard and shortening McD.  had blended exclusively for them.  It was why their fries beat all others.  Now they are cooked in something else that has no taste.  The burgers used to be made from fresh (not frozen) meat we got each morning from Armour.  The fat content was carefully controlled and measured.
    3)  Their food is made and then placed in plastic trays until needed.  Not very fresh.
    4)  The average customer wait time from placing the order to receiving it was 78 seconds.  Easy orders (burger, fry, Coke.) even faster.  Now???

    If you opened up a restaurant that used the old Mcd. formula (Q-S-C = Quality, Service, Cleanliness), could you put McD. out of business?

    • #49
  20. The Great Adventure! Inactive
    The Great Adventure!
    @TheGreatAdventure

    RushBabe49

    I am in “Supply Chain Management”, formerly known as Purchasing.  The main trade group, which used to be NAPM (National Association of Purchasing Managers), a few years ago changed its name to ISM (Institute for Supply Management).  They have been assiduous in removing the word “purchasing” from all their world, since what they/we do is so much more than “purchasing”, in spite of the fact that the majority of their members have “buyer” or “purchasing” somewhere in their job title.  The guy who you spoke to could better be called Director of Supplier Quality

    I’ve worked in the SCM realm for 30+ years now, and I would respectfully suggest that if you think Purchasing=SCM, you’re seriously delusional.  That’s similar to saying the robot welding the trunk together on the assembly line is actually building the whole car.

    The thing about this topic that baffles me the most is that McD’s outsources most of its supply chain.  There are several companies (Golden State Foods, Martin Brower, Keystone Foods, etc.) that actually perform the majority of the tasks of acquiring/distributing/transporting the product to the stores.  They even have a separate company (HAVI) that coordinates all of these outside companies.  So maybe since McDonalds itself doesn’t actually do most of the work, this Sr. Director has to have something else (Quality Systems) to keep him busy?  I dunno.

    HAVI is a client of mine, btw.

    • #50
  21. She Member
    She
    @She

    Bishop Wash:

    She:I’ve never been much of a fan since they stopped frying their fries in what was probably a mixture of used motor oil and lard many years ago, and went ‘healthy.’ Not nearly as good. And whoever made the decision to BAKE the apple pies was a dunderhead too.

    I didn’t know that they had switched to baked pies. However, this weekend I had a short lunch break and grabbed some McDonalds. A sign in the drive thru proudly proclaimed that fried pies are back and to try the peach pie, available for a limited time. This was in So Cal, but is probably a nation-wide change.

    WHOA!!

    Thanks, I will check. There is something about the greasy pastry sticking to the roof of your mouth that can’t be duplicated in the baked version.

    I feel the same way about really hot, fresh sugar donuts. There’s nothing like greasy sugar stuck all over your face. In Little Washington, PA, we get them at Joe’s Bakery on Main Street.

    https://news.google.com/newspapers?nid=2519&dat=19930513&id=DS1iAAAAIBAJ&sjid=xnYNAAAAIBAJ&pg=3839,5127498&hl=en

    • #51
  22. Joseph Kulisics Inactive
    Joseph Kulisics
    @JosephKulisics

    Pilli:If you opened up a restaurant that used the old Mcd. formula (Q-S-C = Quality, Service, Cleanliness), could you put McD. out of business?

    I find the decline of McDonald’s to be sad, but the fault belongs to its management. I liked all of your observations, and I’ve thought many of the same things. I’d just add a few observations.

    1. Look at the interior decoration of most McDonald’s. They look like cafeterias in office buildings instead of hamburger places. Look at the uniforms. Polo shirts and black pants. Visors. Ugh! It’s so dreadful. I don’t recall McDonald’s being like that in the distant past. As I recall, the uniforms and interior decoration made you think of, well, a hamburger place, which was no cause for embarrassment. Compare In-n-Out with its white tiles, paper hats, and white, button-down shirts and pants.

    2. They should stop thinking of Five Guys and Chipotle as their competition. Their competition is Sonic and In-n-Out, which is only regional at this point. Sonic features ice cream products. McDonald’s used to feature shakes. Does McDonald’s even sell shakes anymore? High-end burgers are a niche market. The market won’t support thousands of Chipotles and Five Guys restaurants. They will go the way of Baja Fresh and Boston Market. Unless McDonald’s wants to go the route of Baja Fresh and Boston Market, it should aim for mass appeal.

    • #52
  23. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Bob L:

    Misthiocracy:

    Thomas Stack:Carl’s Jr. is directing it’s marketing efforts towards its core demographic with its very untrendy menu and doing great. MacDonalds should take notice.

    So, the argument is that McDonalds should switch from a mass market to a niche market?

    Sounds like a recipe for massive downsizing.

    I think he means use boobs to sell giant cheeseburgers to young men.

    Oh.  I can see the logic in that.  The old McDonalds strategy of marketing to young children doesn’t really work in a culture that doesn’t reproduce.

    • #53
  24. Pilli Inactive
    Pilli
    @Pilli

    Joseph Kulisics:

    1. Look at the interior decoration of most McDonald’s. They look like cafeterias in office buildings instead of hamburger places. Look at the uniforms. Polo shirts and black pants. Visors. Ugh! It’s so dreadful. I don’t recall McDonald’s being like that in the distant past. As I recall, the uniforms and interior decoration made you think of, well, a hamburger place, which was no cause for embarrassment. Compare In-n-Out with its white tiles, paper hats, and white, button-down shirts and pants.

    When I work for McD., we wore a white shirt, black tie, dark blue or black pants and one of those blue paper hats.  We looked just like those guys in the commercial in #7.  The manager wore an orange paper hat.

    MCdonald’s put me through college and several other guys I worked with, too.  I was proud to have worked there and never regretted any of it.  I only rarely eat there any more though.

    • #54
  25. Joseph Kulisics Inactive
    Joseph Kulisics
    @JosephKulisics

    Pilli:

    When I work for McD., we wore a white shirt, black tie, dark blue or black pants and one of those blue paper hats. We looked just like those guys in the commercial in #7. The manager wore an orange paper hat.

    I can imagine that it was a lot different. Every time that I go into one now, I think that the staff look like slobs. They wear the headsets, which on first impression, make you think of technical efficiency, but when you watch people work, instead of making better use of the employees time and getting better throughput, the technology seems to make them ignore everyone simultaneously. They seem to have gone for something other than real value, efficiency, and readily apparent cleanliness. I just dug up a picture of In-n-Out staff at work. The white uniforms and busy staff scream cleanliness and success. By contrast, when you go into McDonald’s these days, you see something basically like this but gritty and grim. The contrast with Sonic is just as bad. McDonald’s problem isn’t the cost of labor. In-n-Out staffs their busy places with lots of hands, and the food remains of great quality and a good value. McDonald’s problem isn’t the complexity of its menu. Sonic appears to have just as large and complex a menu. McDonald’s problem is all cultural. The unfocused culture now seems to encourage bad attitudes in the employees.

    • #55
  26. Joseph Kulisics Inactive
    Joseph Kulisics
    @JosephKulisics

    I also wanted to say that whenever I read an article on the strategy of upper management at McDonald’s, I think, “What a bunch of idiots!” Assuming that the authors represent the management’s concerns correctly, McDonald’s is concerned about the growth of chains like Five Guys and Chipotle. What are they thinking. You don’t need an MBA to see the limited potential of Chipotle. If there’s one thing that America has in abundance, it’s cheap, authentic, and good burritos. Chipotle is on course for rapid growth followed by a crash just like every other over-extended, niche chain in the past. Do some MBAs really think that a small cohort of hipsters can support thousands of restaurants? I don’t think that they ever ask themselves the question. The same goes for Five Guys. The market for burgers over five dollars is relatively small, and you cannot target the market for five-dollar burgers without losing the market for three-dollar burgers. If you try to do both, you’ll do neither well.

    • #56
  27. Be Happy Inactive
    Be Happy
    @BeHappy

    Come on down south and enjoy Chic-fil-A, clean floors, restrooms, and happy eager employees. Oh and great food! We haven’t been in a McD’s in years.

    • #57
  28. Koblog Inactive
    Koblog
    @Koblog

    I felt sorry for McDonalds when the “Supersize Me” hitjob movie came out. I actually sought out McDonalds to send them some business. There’s one across the street from my employer.

    Then the McDonalds Corporate Office hired the odious Obama hack Robert Gibbs — the sleaziest conman alive — to transform McDonalds into a “progressive” restaurant.

    Thus I have set foot into a McDonalds for the last time.

    And you know what? Carls Jr is clearly superior. Cleaner, faster, and superior service. Their burgers taste like…meat. Not that strange Big Mac flavor that leaves an aftertaste of cow eyeballs (“all beef” you know).

    To echo Mr. Trump, McDonalds is a loser.

    I wrote to the McDonalds Corp Office complaining about Gibbs. They wrote back that they are “not political.” Got that? Robert Gibbs isn’t a political animal. Right.

    Turns out McDonalds is a deluded bunch of liars, too.

    McDonalds managed to drive away actual, life-long customers in a failed effort to become a “progressive” restaurant that “progressives” would never enter. Idiots.

    • #58
  29. MLH Inactive
    MLH
    @MLH

    Guess I’ll have to see if my dad likes Carl’s Jr.

    Jack-in-the-Box is his actual favorite but the one we have is so inefficient and I can’t reload the gift card (every other Sunday we have a caregiver  who takes him out for a burger and shake).

    • #59
  30. Joseph Kulisics Inactive
    Joseph Kulisics
    @JosephKulisics

    Koblog:Then the McDonalds Corporate Office hired the odious Obama hack Robert Gibbs — the sleaziest conman alive — to transform McDonalds into a “progressive” restaurant.

    I agree that hiring Gibbs is a bad move, but I think that the decline has been so gradual as to be almost imperceptible. The company started pandering to environmentalists around thirty years ago when they switched from white paper sacks to brown paper sacks. I don’t believe that the color of the paper does anything more than signal a willingness to put environmentalists and other interest groups before actual customers. The brown paper products give everything a shabby look, so places like In-n-Out continue to use white bags and napkins. I believe that they stopped using tallow in fries around the same time. I’m guessing that the move away from the seventies branding with the distinctive buildings with the Mansard roofs is less than ten years old. They have done so much over the last thirty years to appease critics who will never eat at a McDonald’s anyway.

    I remember Walmart doing the same thing some time ago. I searched and found an article referencing the company’s hiring of Gore adviser Leslie Dach, who focused on greening the company. Apparently, Walmart wasted five years on the person’s projects and after recording two straight years of declining sales, fired the person.

    I wish that McDonald’s would remember who its customers are and stop responding to fanatics.

    • #60
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