McDonald’s Global Strategy & International Plan

Declining sales and sluggish customer traffic may eventually spell out even bigger problems for McDonald’s, compelling the world’s biggest burger fast-food chain to roll out changes and work toward enhancing business systems on a global level.

McDonald’s recently revealed it suffered a gloomy 3.3% sales drop, according to its 3rd quarter report. The decline was steeper than analysts had earlier predicted at 3%. International franchises that have been opened for no more than 13 months also suffered a 3.8% slump in sales, recent reports reveal. Meanwhile, sales of counterpart franchises in the United States were down 4.1%.

Analysts note that consumers are becoming picky with their food choices, including on fast food levels.With competitors like Chipotle dangling “healthier”, “fresher” selections that tailor the shifting tastes of customers, it’s not surprising even for longstanding fast food giant like McDonald’s to suffer lackluster sales and weak customer traffic.

While evidently intensifying competition is a pressing problem that McDonald’s is facing, the company is also actively addressing issues on allegedly questionable food quality that is wreaking havoc on its image. The chain behind the iconic Golden Arches has launched a social media campaign that allows any customer to ask questions regarding food preparation and presentation.

To combat the consequences of the strengthening shift in consumer behavior on a global scale, McDonald’s has announced turnaround plans that essentially focus on “streamlined menu” so that franchise operators worldwide are able to cater to local tastes.On the domestic front, McDonald’s is already catering to “regional tastes” with the new “Create Your Taste” option that offers an enhanced variety of fresh ingredients and toppings as well as bun selections.

In addition, McDonald’s is also actively taking the necessary steps to simplify the ordering process as well as the payment procedures. Consumers, who are increasingly becoming mobile-oriented, are seen to gravitate toward the company’s mobile offerings which will soon be rolled out globally.

Chicago Tribune features the strategies McDonald’s is implementing to put a stop to an impending massive decline in sales and attract customers who are turning their backs on the traditional go-to burger-and-fries chain:

[McDonald's CEO Don] Thompson said the company recognizes it must demonstrate to customers and to those in the company “that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business.”

Shares of McDonald’s fell 0.6 percent to $91.03 in morning trading.The company expects its slump to continue in the near term. Global same-store sales should decline in October, Thompson said.

There is some optimism that things should get easier for the company in 2015. Easing beef costs and lower gas prices “could help spur demand,” said Edward Jones analyst Jack Russo.

McDonald’s outlined three areas it plans to focus on globally to increase its relevance with customers and lead them to visit. It plans to work on what it calls the “McDonald’s experience of the Future” to be more in tune with consumer needs; simplifying ordering, payment and mobile offers; and reviewing its structure and how it uses resources to redirect spending toward the proper initiatives.

In the United States, the company said, new president Mike Andres will work on plans to simplify the menu to showcase core items and feature locally relevant options.

Russo said “there has to be urgency in their actions.”

Photo by: Rupert Ganzer

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