STAFF NEWS & ANALYSIS
Is McDonald's Part of a Bigger Problem?
By Staff News & Analysis - March 10, 2015

McDonald's Latest Sales Are Worse Than Expected … McDonald's MCD +0.6% worldwide sales fell a more than expected 1.7% in February, marking nine consecutive months of declines. This comes a week after new CEO Steve Easterbrook assumed the top job. Easterbrook, who has said he considers himself an 'internal activist,' is faced with reviving the lagging sales that cost previous CEO Don Thompson his job. – Forbes

Dominant Social Theme: McDonald's is All-American food. And it will be again.

Free-Market Analysis: In the 1950s, the burger was surely considered "America's food." But today, the US consuming public has apparently grown wary of such staples, and McDonald's is bearing the brunt of the damage.

What remains McDonald's great selling point is its price. People who are hungry will forgive a lot if the food tastes good – or at least okay – and fills them up.

People may know that McDonald's fare isn't very good for them, but they buy it anyway – though not so much as before. That's a big change since the 1950s. At the time, McDonald's epitomized the cult of "burgers 'n fries." Its milkshakes were on the cutting edge: thick, frosty and mixed by a patented machine.

It might have been considered positively un-American to criticize McDonald's, or the "drive-in" generally. But today, thanks to a voluminous increase in information, consumers are quite a bit more aware of what they are eating and whether or not it's "good" for them.

What's been discovered (by ordinary people in the US especially) is that many of the ingredients in food are a good deal more questionable and even cancer-causing than they once thought.

The idea that the US's most trusted ready-to-eat brands actually host ingredients that are bad or even toxic has taken a while to sink in. But judging what's happening to McDonald's, people have finally internalized the message.

This is a significant trend. And it comes down to that most important ingredient: Trust. The more that people find out, the less trust they have.

One can see this in falling vaccine rates that apparently continue to tumble no matter how many public relations campaigns are launched to prevent it. Circumcision, from what we've read, is on its way out in 21st century America – and "tonsillectomies" are a thing of the past. Despite Big Pharma's attacks on vitamins, probably more people take them than ever.

And that's just scratching the surface. Whether it's taking out second mortgages or "fighting overseas for freedom so they don't come here," an expanding number of ordinary US citizens are evincing doubts.

We've predicted this over and over again for many years now. As digital information sweeps the world (as print swept the world during the Gutenberg era) various forms of enlightenment will continue to expand as institutions that were once seen as sacrosanct are suddenly revealed to be less than perfect.

McDonald's is the latest victim of this trend. The reality is so pervasive that a top Russian official recently criticized both McDonald's and Coca Cola for knowingly selling unhealthy products.

Last year Gennady Onishchenko said that Coca-Cola and Pepsi were "chemical weapons," and suggested both brands ought to banned. Here, from News.com.au:

"The aggressive marketing they carry out — which has nothing to do with our culinary traditions — is comparable to a war against our people," said Onishchenko, speaking to radio station Russkaya Sluzhba Novostei.

These remarks are presented by Western media within the context of Russian-US tensions, and are thus offered as evidences of Russian propaganda. But what the mainstream media doesn't report is that a surprising number of US – and Western – citizens might agree with them.

Certainly, McDonald's has gotten the message. More from Forbes:

U.S. sales fell 4%, as the fast food giant continues to face heavy competition from fast casual chains like Chipotle and Panera.

"Consumer needs and preferences have changed," said the company in a statement. "McDonald's current performance reflects the urgent need to evolve with today's consumers, reset strategic priorities and restore business momentum."

Last week, McDonald's announced it would start to phase out the use of chickens that are raised with human antibiotics … "Rebuilding brand trust by strengthening McDonald's quality and value perceptions is one of APMEA's top priorities for 2015," the company said.

McDonald's to its credit sees rebuilding its brand as a top priority. But what if this is impossible? Along with others we've documented the explosion of interest and patronage regarding "natural and whole foods." Can a fast food chain, any fast food chain, swim against the tide?

McDonald's executives seem to see their challenge as one for which reconfigured branding can compensate. But what if the very business model that McDonald's employs is simply out of step with growing public preferences?

This is perhaps unfair to McDonald's – as the challenges faced by the US's largest burger chain are likely confronted by a variety of vendors. It is the corporate model itself and the inevitable compromises that "bigness" demands that may lie at the heart of the difficulties of modern corporate America.

You won't find many reports on this issue, of course, but it seems evident to us – at least as a possibility …

Monsanto, reeling from lawsuits and bad press, complains that people don't trust its "science." Big Pharma, under attack regarding its most basic and trusted product – vaccines – struggles to find a way to reassure an increasingly skeptical public that its wares are legitimate and necessary. Politicians search for the words to reassure anxious citizens that "American exceptionalism" can indeed provide an expanding living standard when that seems increasingly questionable.

It's perfectly possible that McDonald's problems are Problems of the Age, not merely a temporary setback that can be ameliorated by a corrected menu and a renewed emphasis on building morale.

After Thoughts

The trend toward wholesome and whole foods is surely here to stay. But what the media and corporate America itself may not fully understand is that it could be part of something much larger.

Posted in STAFF NEWS & ANALYSIS
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