McDonald’s (MCD) is embarking on some serious soul searching. The chain is setting aside the next 18 months as a period not only to develop the normal lineup of new menu items but also to rebrand itself. McDonald’s needs to be an appealing place to eat, not just a cheap one.
Six quarters is a long time. The chain told investors this week it is taking the next year and a half to regroup after sales continued to slide in the recent quarter and such competitors as fast-growing Chipotle Mexican Grill (CMG) seem to be leaving the burger leader behind. In McDonald’s case, however, the repositioning won’t necessarily involve the typical hallmarks of a rebrand, such as a new logo or total design overhaul (a strategy Olive Garden (DRI) has taken), but will instead focus on reworking the basics: better value, service, marketing, and menu. Why else would it plan to start serving “sustainable beef” in 2016 and add more fruit and vegetable options?
The goal is to become a “more trusted and respected brand,” said Don Thompson, McDonald’s chief executive, on Tuesday’s earnings call. The McDonald’s brand—eroded over the years by service problems, dietary concerns, lack of blockbuster product launches, and recent employee-pay issues—isn’t one many consumers feel too good about anymore. According to Infegy, a company that analyzes social media, 38 percent of online conversations about McDonald’s over the past year have been negative.
To create a dining experience “customers will feel good about,” as Thompson put it, McDonald’s has turned a West Coast restaurant into a “learning lab” to gather feedback about the food, environment, and other aspects of dining at the Golden Arches.
As the chief executive has said in the past, the McDonald’s renaissance will encompass a simplified menu, remodeled restaurants, and such modern amenities as Wi-Fi. The company will also open more restaurants and expand its digital efforts. Core products, such as the Big Mac, Egg McMuffin, and fries—three items that account for about 40 percent of sales—will be at the center of the food efforts, and expect menu additions to be focused around “premium” beef and chicken items, breakfast food, and coffee and blended ice drinks.