McDonald’s Corporation (MCD) Needs to Balance Speed, Quality in Wake of Same-Store Sales Collapse

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McDonald’s Corporation (NYSE:MCD)’s same-store sales had their worst performance since 2003 in the last quarter, falling 1.5% in the U.S and 1% in Europe. Millenials meanwhile; those in their 20’s and 30’s, are deserting the fast-food company for alternatives like Panera Bread Co (NASDAQ:PNRA) and Chipotle Mexican Grill, Inc. (NYSE:CMG).  Mary Chapman, director of product innovation for food industry research firm Technomic, told TheStreet yesterday that McDonald’s Corporation (NYSE:MCD) isn’t currently appealing to what Millennials are looking for in a low-cost restaurant experience.

McDonald's Corporation

“What McDonald’s has succeeded by is consistency and speed, and at the same time Millennials are looking for quality and experience, which almost seems counter to that. So when you increase your quality, you slow down your process, you slow down the line of people, you lose that brand asset that you’ve built up over all these years, so the trick for McDonald’s is going to be balancing those two things […],” Chapman said.

As she points out, it’s not as simple as appealing to Millennials without losing their identity, though she believes McDonald’s Corporation (NYSE:MCD) does need to do a better job of balancing the two. She does add that McDonald’s Corporation (NYSE:MCD) is still the leader in sales among Millennials despite the declines, and in overall sales over other fast-casual restaurants by a large margin, and that the fast-food chain can and will adjust as necessary to meet the needs of the public. So we shouldn’t necessarily expect the downward trend and market share loss to rivals to continue, even among Millenials.

“It’s a big ship, but it’s succeeded before in turning it. It might be slow, but it’s succeeded before in turning that big ship. So when you put it in perspective, McDonald’s isn’t going anywhere anytime soon,” she said.

Israel Englander and his hedge fund Millennium Management is one of the biggest shareholders in the nearly 60-year-old fast-food company, with just over 900,000 shares in McDonald’s as of the June 30, 13F filing period.

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