April 22, 2015 / 8:54 PM / in 2 years

McDonald's recipe for success may need focus on consumers, workers

A McDonald's restaurant sign is seen in San Diego, California March 31, 2015. REUTERS/Mike Blake

LOS ANGELES (Reuters) - As McDonald’s Corp prepares yet another plan to revive its business, company watchers have the following advice: reconnect with lower income consumers who remain faithful to the brand, improve wages and ease the financial burden on operators.

Steve Easterbrook, the company’s new chief executive, on May 4 will announce his plan to reinvent McDonald’s as a “modern, progressive burger company” that is more responsive to global diners’ increasing demand for fresh, less processed and more customized food.

The company signaled its plan for a fresh start after reporting another quarter of disappointing financial results. It declined to provide further details ahead of the announcement.

Easterbrook has helped forge previous restructuring plans at the world’s largest hamburger chain. They include simplifying complicated menus, flattening management structure, closing hundreds of underperforming restaurants and removing important human antibiotics from its chicken production.

Faith Popcorn, founder and CEO of marketing consulting firm BrainReserve, would like to see McDonald’s embrace the lower-income consumers that account for a big share of its diners and employees.

“They should be the champions of the 99 percent,” said Popcorn, who has worked with McDonald’s in the past and advised some of the best known U.S. consumer brands, including Coca-Cola Co and Campbell Soup Co.

She advised the company to take concrete steps, such as serving healthier fast food and encouraging franchisees to follow McDonald’s corporate leadership to raise wages for restaurant crew members.

U.S. franchisees in a recent survey said their relations with McDonald’s Corp had hit a new low. They called on the company to implement changes to help their bottom lines.

The franchisees, who operate nearly 90 percent of McDonald’s U.S. restaurants, worry the company is trying too hard to be all things to all people. They called on management to significantly downsize the menu and rethink a plan for custom burgers that they worry will be labor-intensive and expensive.

One franchisee also called for cost relief.

“Nothing would ignite owner/operators more than lower rent and service fees,” said the franchisee, whose identity was not revealed.

McDonald’s rivals such as Wendy’s Co and Burger King have boosted their financials by selling virtually all their restaurants to franchisees.

McDonald’s could make a similar move by increasing the percentage of its global franchised restaurants to 90 percent from 80 percent, said RBC Capital Markets analyst David Palmer.

“We believe that the management gets it,” Palmer said, adding that the question is how long it will take to turn the ship.

Reporting by Lisa Baertlein in Los Angeles; Editing by Michele Gershberg and Andrew Hay

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