McD’s looks for answers down under
New commercials may indicate McDonald’s is looking to increase the effectiveness of its "I’m Lovin’ It" ad campaign, but the chain and its investors are certainly not enamored with the fast food giant’s recent performance, which includes a 4.6 percent drop in U.S. sales in November and a one percent decline in October. To its credit, the chain is seeking answers, and many of those, according to reports, are coming from Australia.
Back in October, a YouTube video from a McDonald’s location in the land down under showed a touchscreen with a long list of ingredients enabling customers to create their own burgers, which were then delivered by staff to the table. The process seemed more akin to what you might expect in one of the growing "better burger" chains.
A recent piece on TheStreet website by Brian Sozzi, president of Belus Capital Advisors, suggests that McDonald’s could learn some things from Shake Shack, Five Guys, Smashburger and others in the new generation of burger chains. McDonald’s may have grown delivering fast and cheap meals, but it no longer is all that much cheaper than competitors perceived as offering higher quality products. A cheeseburger at Five Guys sells for $6.79 while a McDonald’s Big Mac sells for $5.
Other options for McDonald’s may lie in new concepts that bear little connection to the chain’s burger past. According to reports, the company is testing a new concept in Sydney, The Corner by McCafé, that doesn’t have a Big Mac or fries in sight. It does have items on the menu that include tofu, brown rice, eggplant salads and Moroccan roast chicken. Instead of selling Coke, the "learning lab" offers craft sodas.
Whether The Corner by McCafé ever becomes a standalone concept remains to be seen, but that is not the point of the test.
"We are committed to serving up real and noticeable change," Becca Hary, a McDonald’s spokesperson, told USA Today. "The Corner by McCafé is yet another example of this."
- What Struggling McDonald’s Could Learn from Shake Shack and Five Guys – The Street
- Why McDonald’s Isn’t Shake Shack and Probably Shouldn’t Be – The New York Times (tiered sub.)
- Are customized burgers and mobile apps the future of McDonald’s? – RetailWire
- This Trendy New Café is Actually a McDonald’s – The Daily Mail
- McDonald’s tests healthy café – USA Today
What do you see as the biggest challenges facing McDonald’s in the U.S.? What does it need to do to reverse its recent declines? Are entirely new restaurant concepts an answer for the company?