While everyone is trying to figure out how to fix the troubled fast food chain, they are missing one very important ingredient…and it ain’t pickles.
My nephew David’s first word was “fries.” He learned it at McDonald’s. Two generations later, McDonald’s is the one getting fried.
The most ubiquitous export brands in America – Boeing, Levi and Walmart not withstanding– and the greatest ambassador of American culture to the rest of the world, McDonald’s is facing perhaps its biggest challenge since it was trying to figure out how to cut a sesame-seed bun into three slices.
After an incredibly strong run in the early 2000s, just about everything has been going wrong for the world’s largest purveyor of burgers and such. Changing consumer tastes are edging towards healthier, more natural choices. A bloated menu has slowed down its service to the point that the fast in fast food has become merely a suggestion. Politics in Russia and elsewhere are upsetting its international units. And a new wave of competition from more upscale burger chains like Shake Shack and Five Guys is draining away customers looking for a decent burger.
It’s enough to drive a CEO crazy…and away. A few months ago, the company brought in a new president to try to get Big Mac off the grill and back into the good graces of the fast food eating world. This is no doubt extremely troubling for such a storied and successful company. After all, McDonald’s invented the very concept of fast food, and over the years, has brought innovation after innovation to the marketplace. Its original menu of burgers, fries and shakes set the standard and became the menu of America. With its premium sandwiches like the Quarter Pounder and that Big Mac, it traded up customers to bigger meals and higher prices…not to mention, bigger and higher calorie counts.
It invented the idea of fast food breakfast. Not content with beef, it moved into Chicken McNuggets, usurping Colonel Sanders’ place in the world of fried poultry. More recently, it has brought healthier meals, salads and coffee to the world…and the world has responded in kind.
Time after time the company figured out how to respond to a changing restaurant landscape and come out of it smelling as sweet as one of its chocolate shakes. But this time may be different because Steve Easterbrook, its new CEO since January, hasn’t figured out the new recipe for its secret sauce yet.
Everyone has a theory on how to fix McDonald’s. The company itself says it needs to simplify its menu and speed up service, while at the same time it is testing a new system to allow for more customization of its products, a seemingly contradictory strategy. Others say it should be more like Shake Shack or the fast-growing Chipolte. Most have failed to see the irony in the fact that McDonald’s was an early investor and part owner of the latter, an investment it unwisely chose to discard. As for the former, one has to wonder exactly how big the market is for pricy burgers that require a 20-minute wait.
Which brings me back to my nephew David. One of the foundations of the McDonald’s corporate juggernaut has always been its catering to young families with kids. From Ronald McDonald to Happy Meals to that incestuous “Two all-beef patties….” ditty of years ago, it was its appeal to children that drove so much mealtime activity. Yet nowhere in any of its announcements about new plans is there much mention of appealing to kids and even if there were, therein lies the fatal flaw in any McDonald’s turnaround.
There are simply fewer kids being born then there used to be. The United States is in the middle of a baby bust and has been so for the past six years. In 2007, just over 4.3 million babies were born in the country, an all-time record that even beat the peaks of the Baby Boomer era. By 2013, that number had dropped to about 3.9 million births, a nine percent drop from the top.
That’s nine percent fewer little kids watching McDonald’s TV commercials and producing 3.4 meals to be eaten when the family goes through the drive-thru. Nine percent fewer kids who will grow up addicted to meat on a bun. And nine percent fewer kids guilting their parents into going to see Ronald…and eating McDonald’s fries.
Now, I’m not saying that’s what David did, but how else to explain his vocabulary development?
McDonald’s has lots of things that need fixing, but I don’t hear anybody talking about this fundamental problem of dealing with fewer kids being born and thus fewer families coming to its restaurants. Easterbrook and his management must solve this part of the equation if they are to turn around McDonald’s. Do they double down and go for a bigger share of a smaller market? Do they target more marketing at kids, set aside family-friendly eating environments or tie-in with more kids programs? Whatever it is, McDonald’s must address this issue.
Otherwise it will remain as stale as a vat of used frying oil.
Warren Shoulberg is editorial director of several B2B publications for Progressive Business Media. He prefers Shake Shack but admits nobody beats Mickey D’s fries.