McDonald’s 5 biggest challenges common to many businesses

NEW YORK—Times are getting leaner for McDonald’s.

McDonald’s said October 21 a key sales figure declined 3.3 per cent in the U.S., marking the fourth straight quarter of declines for the world’s biggest hamburger chain. By contrast, fast food restaurant Chipotle reported a 19.8 per cent increase in sales at established locations a day earlier.

McDonald’s (14,000 U.S. locations) is far bigger than Chipotle (1,700 locations), making it more difficult for the chain to boost sales. But McDonald’s nevertheless acknowledges it needs to work on fixing some problems.

Here is a look at five problems McDonald’s is facing:

Bad product image
To defend the image of its food, McDonald’s launched a social media campaign last week inviting customers to ask questions about the ingredients it uses. Showing just how bad perceptions can be, among the first questions McDonald’s addressed were “Why doesn’t your food rot?” and “Do you use real chicken in your Chicken McNuggets?”

The company has run similar programs in Canada and Australia, where it says the program has built trust with customers.

Lack of flexibility
Consistency has long been one of McDonald’s strengths—people like knowing exactly what they’ll get when they order a Big Mac. But now people are gravitating toward places like Chipotle that let people tailor their orders. To offer greater customization down the line, McDonald’s recently rolled out prep tables in its kitchens that can hold more toppings and sauces.

The company is also testing a “Build-Your-Own-Burger” offering in southern California that lets people pick the bun, patty and toppings they want. In Australia, McDonald’s has already said it plans to roll out the format nationwide.

Dicey service
McDonald’s executives have said they introduced too many items too quickly last year, such as McWraps and the option to substitute egg whites for its breakfast sandwiches. That slowed down service and led to inaccurate orders. On Tuesday, McDonald’s said it would focus on a simplified menu that highlights its most popular items but did not give specifics.

Price sensitivity
Raising prices without driving away customers has been tricky for McDonald’s. At one time, for instance, the popular Dollar Menu included a Big N’ Tasty, which was made with a quarter-pound of beef. But over the years, McDonald’s has had to swap out items as costs for beef and cheese have climbed.

Late last year, McDonald’s revamped its Dollar Menu to be called the “Dollar Menu & More,” with a range of prices up to $5.

More competition
In addition to newer players like Chipotle, longtime rivals Burger King and Wendy’s have been intensifying competition, too. And Taco Bell launched a national breakfast menu to go after the growing breakfast market, which McDonald’s has long dominated.