Finally our efforts to avoid processed foods and Frankenfoods are paying off. For the first time in decades McDonald’s is struggling and has to close more restaurants than it opens after worldwide drops in sales. According to an Associated Press review of McDonald’s regulatory filings, this hasn’t happened since 1970.
Earlier this year the fast food giant announced the closing of 350 underperforming locations, but recently admitted it had to close an additional 350 restaurants in the U.S., Japan, and China. The closings include both franchises and company-owned locations.
While this number may seem small compared to their total of about 14,300 locations, the iconic “Golden Arches” are under fire.
McDonald’s has reported an 11 percent decrease in revenue and a 30 percent drop in profit for the first three months of 2015. This is a continuation of their struggle as the competition in the US and Europe is getting tougher and food safety issues in Asia had to be addressed.
Other growing fast-food chains, like Burger King, Five Guys Burgers, and Chipotle, are luring customers to their side with better deals and healthier options. But that’s not their biggest concern at the moment. Our rising interest in nutrition and our demand for healthier, organic foods is what’s truly troubling them.
The fast food giant has known a rapid expansion through history. Since McDonald’s opened his doors for the first time in 1955 it has known great growth and prosperity by offering affordable and addictive meals. It even thrived during the economic crisis with the Dollar Menu.
But times have changed. People are getting more aware about what they are putting into their body and demand fresh, unprocessed ingredients in their menu options.
Time for change
John Gordon, a restaurant industry analyst with the Pacific Management Consulting Group told ABC that an inadequate response to the changing market is what’s causing the drop.
“McDonald’s is such an internally focused organization, it’s a situation where you don’t have a fresh perspective coming in,” he said.
These days customers aren’t only limited to McDonald’s when they are seeking a quick and cheap meal. Whole foods and other natural food stores are offering organic, whole food meals for about the same price.
Only recently Steve Easterbrook, the new CEO, said in a statement: “As the world’s leading restaurant company, we are evolving to be more responsive to today’s customer. McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace.”
Pruning the tree
As of today, McDonald’s remains the biggest fast food chain worldwide. By introducing new sandwiches like the Sirloin Third Pound and closing underperforming shops it hopes to address the declining sales.
Sometimes the closing of stores may help with the overall strategies to further expand, but Mike Donahue, former chief of communications for McDonald’s, is not sure if this will help America’s most iconic fast-food chain.
“The only thing that stops growth is relevancy to the customer,” he said. So the question is, is McDonald’s still relevant or is our growing passion for clean, organic, whole foods and transparency taking over the world?
According to Donahue, this has happened in the past and people kept coming back and McDonald’s continued to grow anyway. To him the closings are nothing more than “pruning the tree” and building a stronger base.
With their new CEO changes are coming, but people becoming more health conscious in their food choices are definitely the biggest threat that makes the “Golden Arches” tremble on their base.