McDonald’s is struggling to capture its former glory. Although it is still the world’s largest restaurant chain, the company has seen falling sales during the past few consecutive quarters. To reinvigorate the company, CEO Steve Easterbrook announced his restructuring plans Monday.
In a 23-minute video to investors, Easterbrook admitted that “our recent performance has been poor. The numbers don’t lie.”
“We’re not on our game,” he added.
To improve the company’s performance, Easterbrook emphasized that the brand had to stick to its No. 1 priority: serving today’s customers who want “high-quality, good-tasting food” with “fast and friendly service.”
Elusive Customers
In America—the company’s largest market, making up more than 40 percent of its total income—McDonald’s faces pressure from emerging “fast casual” restaurant chain competitors like Chipotle and Shake Shack, which tout fresh, natural ingredients as American consumers increasingly turn toward healthy food options.
Abroad, a recent food scandal involving one of McDonald’s meat suppliers in China caused sales to fall in the Asia–Pacific region.
Though McDonald’s remains the world’s largest restaurant chain, its struggle to capture people’s taste buds was evident in Easterbrook’s attempts to restructure. Phases in his plan include “continuous improvement in food quality and perceptions” and “building brand trust.”
In the United States, it’s clear that the perception is less than positive. In a 2014 survey conducted by Consumer Reports, readers of the magazine rated the McDonald’s burger the worst-tasting among major restaurant chains that offered burgers as a signature dish.
In his video, Easterbrook said the company needed to stress its use of quality ingredients like the “sirloin burger” and “artisan chicken” on the menu, so the brand will become known as the restaurant that “serves the best burger possible.”
McDonald’s has already moved on this front: In March, the company announced that it would require its chicken suppliers in the United States to stop using human antibiotics within the next two years.
More Franchising
On Monday, Easterbrook also said the company will increase the global percentage of stores it franchises from the current 81 percent to 90 percent by 2018. That amounts to 3,500 company-owned restaurants getting sold to franchisees.
The shift will give the company a more “stable and predictable” revenue stream, the CEO explained.
In early April, McDonald’s announced that it would increase wages and offer paid leave to workers at its U.S. company-owned restaurants. Franchises make their own decisions on pay—which means the increased franchising will lead to fewer people receiving the higher wages.
