To say that the world’s most famous fast food chain, McDonald’s, is in financial trouble might seem a gross exaggeration. However the US giant is certainly in an unfamiliar and uncomfortable position. In 2014, the Company recorded its first annual decline in global same-store sales in a dozen years.
The tip of the iceberg (lettuce) is their most recent announcement stating that British Steve Easterbrook will replace current Chief Executive, Don Thompson in March. The Brit will have to find a way to turn around one of the biggest challenges the $87bn company has faced in its 60-year history.
During the recession, the company profited from customer demand to eat cheaply, as well as staff that were happy to put up with low wages, simply glad to have a job. A couple of years later however, America witnessed strikes by its lowest-paid workers, which included Mcdonald’s. Due to the Company’s global status, it was one of the most targeted by the media. And because of their initial refusal to increase wages, they were also one of the worst affected. It angered some regular customers, who took their money elsewhere. This, along with a failed PR twitter campaign in 2012, ‘Tell us what you think of us’, begins to answer another question – why are McDonald’s struggling?
In recent years, Mcdonald’s has found more and more competitors encroaching on their turf. In addition, the shape of the market is changing. Consumers are no longer interested in food that is just fast – amongst other things, they want healthy, fresh and natural. The consumer is willing to pay more, changing ‘fast food’ into what is becoming known as ‘fast-casual’ food.
McDonald’s are falling behind competitors in an overcrowded market. However, the company has introduced campaigns over the years promoting fresh produce or healthy salads. And they are currently running a transparency campaign to give more insight into how their food is made and what goes into it. Predictably, this has brought even more negative press, as the horror of what goes into their food has been revealed.
It seems that McDonald’s should delve deeper into their brand positioning to redefine their 60-year old reputation. As the Company’s former Chief Brand Officer in charge of marketing and menu innovation, Easterbrook seems perfectly tooled to take on this challenge. Perhaps cleaner processes, less junk and better quality ingredients will finally be on the menu. Single figure ingredients for their fries would be a start.
This week, Abchaps welcomed London and West Country Lawyers Thrings to our Sky Bar to exchange our shared areas of expertise. We also hosted a Market Lunch where the outlook and opportunities of AIM was discussed.
Panmure Gordon made two appointments to its research team: Jonathan Leinster as consumer analyst from UBS and Mike Stewart, formerly of Shore Capital, as retail analyst. Erik Anderson, previously of Investec, is joining its corporate broking team. Meanwhile, at Hamlins, Charles Bezzant has been appointed as partner, and he joins from Reed Smith.
"Fast-casual": A fast-casual restaurant is a type of restaurant that does not offer full table service, but promises a higher quality of food with fewer frozen or processed ingredients than a fast-food restaurant.
This weekend, see the inside of one of London’s most iconic film sets. Aldwych tube station has been used in Atonement, V for Vendetta, and Bond, and this weekend is being opened by the London Transport Museum for a rare insight into London’s past.
From underground to up in the air, London is currently playing host to the inimitable Cirque du Soleil, with their new show, Kooza, tickets are still available, but they’re going fast.
Finally, as only Shoreditch can, Floripa is holding a carnival brunch from 12pm – 6pm, promising beach burgers, samba, and potentially some margharita’s!
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