McDonald’s bites off more than it can chew with menu changes

WASHINGTON: McDonald’s is having some Big Mac- sized problems as it finds its image and menu are poorly suited for consumers’ increasing preference for fresh, healthy ingredients.

The restaurant chain said yesterday its global profit tumbled 21 percent in the most recent quarter, and its sales at US restaurants open more than a year sank 1.7 percent. Restaurant traffic was down in all its major markets across the globe.

This latest stumble caps a tough year for the world’s largest fast- food business whose troubles are a marker of a broader cultural shift shaking the industry: diners are increasingly seeking food that is fresh and healthy, and the explosion of fast-casual restaurants such as Chipotle, Panera Bread and Five Guys has given them alternatives that are nearly as speedy as a fast-food joint and perceived as much healthier.

But McDonald’s acknowledges that many of its problems are of its own making: as the company tried to take on these new competitors while also hanging onto its traditional business, its menu grew bloated and its pricing strategy became confusing.

McDonald’s has said that wait times were getting longer at its drive-through windows as its menu grew increasingly long and complicated, with some 100 items added over the last 10 years. Some restaurants didn’t have enough space in the kitchen to prepare such a wide array of dishes.

When the company unveiled a sweeping turnaround strategy late last year, it promised to streamline its menu to fix the bottleneck. But as the details of the plan have unfolded, analysts say it seems muddled.

The chain is eliminating eight menu items and five Extra Value Meals. But it is also promising to regionalise its offerings in the US with different sauces or flavours to appeal to local tastes, a move that seems to contradict the stated goal of simplifying the menu.

McDonald’s has also been rolling out a custom burger option it calls “Create Your Taste”, in which diners can pick and choose their toppings.

“It smacks a little of trying to be all things to all people, and I think that’s a very tough brand positioning to pull off,” said Mark Kalinowski, restaurant industry analyst at Janney Capital Markets.

He estimates McDonald’s pulls in more than 60 percent of its US sales at drive-through windows. – Washington Post